The Myth of Expansionary Austerity — Christian Breuer

Summary:
In my new INET working paper, I revisit their method and identify a fatal fallacy of the case for expansionary austerity that by itself overturns the claims made for the view.Statisticians call the mistake “reverse causality.” What it means, in this case, is that the statistical techniques adopted to test models of expansionary austerity fail to properly account for cyclical movements in the expenditure-GDP ratio. It follows that decreasing expenditure-GDP-ratios appear to cause an increase in GDP, instead of the the other way around.... Naked CapitalismThe Myth of Expansionary Austerity  Christian Breuer, Junior Professor, Chemnitz University of Technology and Head of Wirtschaftsdienst and Intereconomics, zbw – the Leibniz Information Centre for EconomicsOriginally published at the

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Mike Norman considers the following as important: expansionary fiscal austerity, reverse causality

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