Austerity policy triumphed despite its authors conceding weak empirical evidence

Evidence

To their credit, Alesina and Ardanga fully admit that the case for expectations having their purported powerful effect is “weak,” while acknowledging that devaluations, wage agreements, and several factors other than expectations matter. Yet despite these acknowledged limitations, when the crisis hit, “Tales of Fiscal Adjustment” was seen by anti-Keynesians as the appropriate instruction sheet on how to stop the twelve-month Keynesians discussed in chapter 3 from dominating policy during the bust, and it worked. But what clinched the case in policy circles, especially in Europe, was an update to “Tales” by the same authors written in 2009, especially a version of it Alesina delivered to the ECOFIN (Economic and Financial Affairs Council of the European Council of Ministers) meeting in Madrid in April 2010. … And despite acknowledging in the prior paper that the evidence for such expectations-driven expansions was “weak,” they deploy this explanation here again in full force and with no caveats about its actual explanatory power. — Mark Blyth, Austerity, 468

Categorization

• XREF: Connects directly to Mattei and the austerity literature that stresses how ideas get political traction regardless of evidential support. — connects to: The IMF’s 2011-12 papers refuted the expansionary austerity hypothesis by name — Mark Blyth, Austerity: The History of a Dangerous…, 582; Ireland was promoted as austerity’s success model despite weak recovery evidence — Mark Blyth, Austerity: The History of a Dangerous…, 632; Contemporary austerity orthodoxy is a recycled 1930s doctrine with no success record — Mark Blyth, Austerity: The History of a Dangerous…, 327 (+7 more)
• QUESTION: What institutional features of ECOFIN or the Eurozone made Alesina’s informal paper carry more weight than peer-reviewed evidence? The transmission channel is the interesting gap.

Broader Connections

• Showing austerity failed does not require proving Keynesian alternatives right #responds-to (0.80) — Mark Blyth, Austerity, 996
• Broader neoliberal shifts enabled austerity’s return to economic common sense #expands (0.80) — Mark Blyth, Austerity, 406
• Austerity’s success cases are few and possibly wrong while its failures are demonstrable #complicates (0.75) — Mark Blyth, Austerity, 479
• The crisis-as-government-fault narrative was engineered to justify austerity #expands (0.75) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 950