The Importance of Government Fiscal Austerity in the Economy

As a sequel to a recent Human Action podcast episode where Bob critiques a Warren Mosler interview, Bob here goes deeper into the analysis of how an economy can continue growing even if the government eliminates its budget deficit. Bob relies on both theory and history, citing in particular the fiscal turnaround of Canada in the mid-1990s.

Mentioned in the Episode and Other Links of Interest:

• The Human Action podcast episode that is the prequel to this BMS episode.
• Mosler interview on the Forward Guidance podcast.
• Bob's debate with Mosler at Columbia.
• Krugman vs. the ECB list of examples of expansionary austerity. (See Krugman's blog post too.)
• Bob’s EconLib article discussing Canadian fiscal turnaround.
• JP Koning post on why the Treasury can't overdraft since 1981.
• An AEI post showing the Romer-Bernstein Obama stimulus package unemployment prediction vs. reality.
• Bob's critique of David Friedman on housing prices.
• Help support the Bob Murphy Show.

The audio production for this episode was provided by Podsworth Media.