Fiscal Policies in Recessions (Grauwe)

Fiscal policies in “normal” and “abnormal” recessions by Paul De Grauwe. The explosion of government budget deficits and debt levels since 2008 has created a lively debate about the effectiveness of fiscal policies in stimulating the economy. This column compares different economic models and argues that the answer depends on the type of recessions we are facing. In “normal recessions” the New Keynesian model is best, but in “abnormal recessions” it is the Keynesian model. see: http://www.voxeu.org/index.php?q=node/4818