in Cambridge Journal of Economics
January 2012; p ublished online January 2012 .
Journal Article. Subjects: Public Economics; History of Economic Thought (1925 onwards); Economywide Country Studies; Money and Interest Rates; International Finance; National Budget, Deficit, and Debt; General Aggregative Models; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; Macroeconomic Aspects of International Trade and Finance. 11726 words.
The contemporary wide-scale austerity measures are likely to fail in most countries. The first fallacy derives from the false diagnosis that the present crisis is the outcome of lax public...