Perverse Fiscal Consolidation

Sottotitolo: 
In the last three years the IMF has revised upwards the size of fiscal multipliers. This has devastating implications: if the fiscal multiplier is greater than the inverse of the Public Debt/GDP ratio, fiscal consolidation necessarily raises instead of lowering the Public Debt/GDP ratio with respect to what it would have been without consolidation.  This appears to be the case for all or nearly all of advanced countries.
PreviewAttachmentSize
perverse_fiscal_consolidation.pdf161.8 KB