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Free keywords:
EMU; economic growth; Germany; public debt; private debt; expansion; monetary policy
Abstract:
Blyth shows convincingly that ‘Austerity does not work’. But he seems to imply that financial repression, higher taxes and monetary expansion would. Are they really compatible, however? Financial repression requires growth, real or nominal. Real growth is widely believed to require lower, not higher taxes. Nominal growth, that is inflation, is difficult to contain as well as to bring about, given trade union weakness and widespread dependence on fixed transfer incomes. Monetary expansion, finally, may simply add to general indebtedness, as it has since the late 1970s when real growth embarked on a long-term decline.
