Friday, 13 March 2015

The CEP evaluates austerity

Whatever interpretation is made of the policy stance, it is clear that the coalition government’s austerity programme was front-loaded between 2010-11 and 2011-12, involved significant public investment cuts and was less than initially planned.

This sounds to me like our old friend the political budget cycle: cut after the election, and create a "boom" before the next election. Independent central banks were supposed to do away with this. But now we're at the lower bound, fiscal policy matters more.

Here is the original document.