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> For example, Olivier Blanchard, now chief economist of the IMF, wrote in 1990 that when a government tightens its belt to reduce deficits, households might st
by guelo 13y ago
> For example, Olivier Blanchard, now chief economist of the IMF, wrote in 1990 that when a government tightens its belt to reduce deficits, households might start spending, relieved that the problem is being handled and there won’t be an even bigger readjustment in the future.
It is astounding to think that changing your personal spending based on what happens in DC is supposed to be the "rational" behavior. These are not economists, they are radical political ideologues dressed in pretend academic clothing.
- yetanotherphd 13y agoThe idea is that people will anticipate that because the government is reducing deficits now, it will have less fiscal problems in the future, and therefore the individual will be less likely to be affected by higher taxes in the future or a greater fiscal crisis in the future. The individual doesn't have to deduce this themself. The information could come second or third hand through a variety of channels.