Policy Research in Macroeconomics

In a downturn, public spending pays for itself

By Ann Pettifor and Douglas Coe

In this PRIME analysis, we are republishing work we did back in December 2009.  That was when we first made an evidence-based case against austerity.  We show in this analysis that in a downturn –  thanks to the multiplier – increased public investment on sound projects pays for itself.

We have taken the decision to republish this work as evidence that those of us who opposed austerity from the start did so on the basis of careful analysis. This cannot always be said of the proponents of fiscal consolidation and austerity.

The work was published in collaboration with the New Economics Foundation and the Green New Deal group as part of “The Cuts Won’t Work” in December 2009.  To download the analysis, click here.

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