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ratio will be inversely related to the growth rate, and (iii) austerity policies - reductions in government consumption and …
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effects of debt on growth. A second result relates directly to austerity policies. The level of government consumption and the … structure of taxation influence the required debt ratio and, paradoxically, austerity policies are counterproductive on their …
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employment, (iii) a fiscal 'austerity' rule that links fiscal parameters to deviations from a target debt ratio fails to adjust … combination of fiscal and monetary policy rules which separately would stabilize the system, and (v) austerity rules can in some …
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This paper makes three main points. Fiscal policy, first, may be needed in the long run to maintain full employment and avoid secular stagnation. If fiscal policy is used in this way, second, the long-run debt ratio depends (i) inversely on the rate of growth, (ii) inversely on government...
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