Monday 20 February 2017

Brendan Keenan: Slaughter of those sacred cows

New research challenges the conventional wisdom on spending cuts and tax hikes but history shows it's not easy to get the balance right

Published 17/10/2010 | 05:00

THERE was quite a cull of sacred cows last week, but the slaughter was discreet and you may not have noticed. Some people, especially my friends in the trade unions, did notice, though and were quick to point to the carcasses.

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The unlikely occasion of this was a series of briefings by a senior economist from the International Monetary Fund (IMF) on what he and his colleagues found in an analysis of budgetary corrections.

There are two big bits of conventional wisdom about fiscal correction. The first is that the increased confidence that comes from a government getting to grips with budget deficits can inspire more consumer spending, and therefore more growth.

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