- (click picture for link to study)
- The typical consolidation that failed relied on 47 percent spending cuts and 53 percent tax increases.
- The typical consolidation that succeeded consisted of 85 percent spending cuts and 15 percent tax increases.
- The “most wildly successful” efforts by nations, as Brooks put it, went into tax cut territory: Finland in the late 1990s, pointed out by Biggs and Hassett as a model of successful consolidation, had 108 percent spending cuts along with modest tax cuts.
- Regarding which cuts : “Specifically, reducing transfer programs and government wages were the most beneficial to growth, according to the 37 year study.” No real surprise there really. How would cutting waste jeopardize growth? (Federal workers earning double their private counterparts).
- Fiscal consolidation can produce wealth effects on growth because of lowered expectations of future tax liabilities and the positive effect on real interest rates.
- This is now termed the “expectational view” of fiscal consolidations and contrasts with the Keynesian belief that a fiscal consolidation will reduce aggregate demand and GDP
Popularity: 8% [?]
[...] Research Shows Spending Cuts Most Successful in Reducing Debt, Supporting Econonmy, Raising Stock and Bond Markets - AEI.org [...]
Hey, very nice site. I came across this on Google, and I am stoked that I did. I will definitely be coming back here more often. Wish I could add to the conversation and bring a bit more to the table, but am just taking in as much info as I can at the moment.
Thank You.
Trading Tips
[...] 37 year Study Shows Spending Cuts, Not Tax Increases, Best for Debt, Growth, Bond, Stock Markets AKPC_IDS += "2068,";Popularity: unranked [?] [...]
[...] This part I agree with and have mentioned several times. The 30 year bond bull market will end in capitulatory panic buying before the ultimate top is reached. Broyhill does not not mention a trigger, but I will. Sovereigns will flee to the US Treasury to seek liquidity when there are currency crash(es) in one or more emerging markets. China, Brazil, Turkey, India, are likely candidates, and it could reach Australia or Canada as well. The difference between Broyhill and my own view is we advocate less government spending, which if it comes from government transfer programs and government pensions, will reduce expectations for higher taxes, and boost the economy. This is what history shows. [...]
[...] size of the government and fighting tax hikes. The Irish example confirms the findings of a 37 year study on successful restructurings, and debunks the Keynesian recommendation for increasing the size of the government and to forget [...]
[...] 37 year Study Shows Spending Cuts, Not Tax Increases, Best for Debt, Growth, Bond, Stock Markets AKPC_IDS += "2979,";Popularity: unranked [?] [...]
[...] also provides evidence refuting calls for avoiding more government spending. In fact, the research shows governments do not improve their fiscal position if tax cuts make up more than 15% of the [...]
[...] reducing payrolls and transfer benefits appear to be on the docket, as opposed to tax highs, which history suggests would not work. In the end, one is left wondering if those forecasting trouble were not wrong, just [...]
[...] had almost thought they were not big enough to be a pre-crises solution to the US debt problems, as this 37 year study of countries that successfully reduced their debt loads show is necessary. Fortunately, a USA today [...]
[...] jobs and transfer payments is the long term path towards a successful fiscal consolidation, according to this 37 year study. Not one country has done this yet, nor is anywhere close to doing [...]
Ok so I am thinking about removing my site from Tumbler and get it to a WordPress blog. I believe this is a wordpress blog right? If it is, may I ask where you got the theme? Thanks a bunch!
Hey, that’s ironic, i was thinking this site looks a little dated and was thinking about migrating from wp to tumblr! It’s the DIY theme. It’s a premium theme, but it’s very customizable.
[...] Sarkozy Sketches Plan to Eliminate French Budget Deficit by 2016: 75% cuts, 25% tax hikes ~ bloomberg . The upcoming election with a Socialist candidate Hollande has important ramifications for the budget. Tax hikes have historically failed to reduce debt when more than 15% of the package, says this study by the AEI. [...]
[...] UK has enacted all tax hikes, but only 30% of planned cuts ~ this failure was predictable, see study – historysquared [...]
[...] 37 year Study Shows Spending Cuts, Not Tax Increases, Best for Debt, Growth, Bond, Stock Markets AKPC_IDS += "6159,";Popularity: unranked [?] [...]
[...] 37 year Study Shows Spending Cuts, Not Tax Increases, Best for Debt, Growth, Bond, Stock Markets AKPC_IDS += "6385,";Popularity: unranked [?] [...]