Popolnoma predvidljiva recesija

Simon Wren-Lewis o tem, kako je bila pretekla recesija popolnoma predvidljiva v okviru standardne (mainstream) makroekonomije: kadar velikega zmanjšanja javnih izdatkov (fiskalne konsolidacije, varčevanja) ne nadomesti ustrezno ekspanzivna monetarna politika, mora output (BDP) pasti, brezposelnost pa porasti.

That framework says that if you have a large fiscal contraction like this […] without a large compensating relaxation in monetary policy, then you will get the stagnation in output that I showed at the top of this post, and a substantial increase in unemployment.

Here I will just quote the key conclusions:

“We find that fiscal consolidation caused a cumulative GDP loss of between 14% and 20% of annual baseline GDP over the 2011 to 2013 period in the Euro Area [EA], implying a cumulative multiplier between 1.5 and 2.2.” and “As a result, the simulated GDP effects of the EA’s fiscal consolidation are large, and would be more than sufficient to explain the recent recession in the EA.”

The idea that a large fiscal contraction shortly after a huge financial crisis would lead to a second recession is not the wild imagining of a group of ‘anglo-saxon’ economists, or a particular macroeconomic ‘school of thought’. It is just mainstream macroeconomics. And we must never forget that this is not the unfortunate cost of having to get debt down in a few periphery countries: as the chart above shows, this fiscal contraction occurred everywhere in the Eurozone. As the simulations described in this link (pdf) show, using the Belgian NIME model, these costs could have been largely avoided if the fiscal consolidation had been delayed until monetary policy was in a position to offset them. It is not just a predictable recession; it is a recession made by policymakers without good cause and therefore an entirely avoidable recession.
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