An empirical nail in the austerity coffin

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I was going to write a piece about how Paul Krug­man doesn’t under­stand IS-LM today, but as often hap­pens when I read Krug­man, I find myself agree­ing with him – even if our approach­es to eco­nom­ic analy­sis are very dif­fer­ent.

That hap­pened today as I pre­pared to write my “Krug­man doesn’t under­stand IS-LM” post: I checked his lat­est blog entry “Paul De Grauwe and the Rehn of Ter­ror” and found he’d linked to an excel­lent empir­i­cal paper on how aus­ter­i­ty poli­cies had func­tioned in Europe – or rather, how they had mal­func­tioned – writ­ten by Paul De Grauwe of the Lon­don School of Eco­nom­ics and Yue­mei Ji of the Uni­ver­si­ty of Leu­ven. Since politi­cians every­where seem enam­oured of aus­ter­i­ty right now, this empir­i­cal work deserves wide expo­sure; my the­o­ret­i­cal pot-shot at Krug­man can wait.
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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.