Austerity or Fiscal Stimulus?
On Modern Macroeconomics and the Importance of Context
This comment is on the article “Strange Defeat” by J W Mason and Arjun Jayadev (EPW, 10 August 2013). Though in general, the paper rightly points out the similarities in the New Keynesian and New Classical macroeconomics and the prescriptions that follow from them concerning austerity vs fiscal stimulus, it fails to highlight the importance of context in resolution of such debates. According to me the austerity issue in the European Union (EU) has to be treated differently from that in the United States (US) and it is certainly different in countries like India.
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