Expansionary-austerity theory traces directly to the 1981 German Council of Economic Advisors
Evidence
This piece has an interesting ordoliberal slant to it insofar as it draws inspiration from an idea plucked from the German Council of Economic Advisors Report from the summer of 1981: cutting spending can increase growth by improving expectations. Giavazzi and Pagano picked up this idea and ran with it. — Mark Blyth, Austerity, 456
Categorization
- XREF: Direct lineage point for the German ordoliberal tradition feeding austerity — connects to Mattei’s treatment of ordoliberalism in the EU crisis. — connects to: Austerity advocates claim expansionary contraction is possible in the medium term. — Mark Blyth, Austerity: The History of a Dangerous…, 592; Expansionary fiscal contraction theory emerged despite contradictory IMF field evidence — Mark Blyth, Austerity: The History of a Dangerous…, 446; Modern austerity arguments trace directly to Einaudi’s Bocconi school of ordoliberal economics — Mark Blyth, Austerity: The History of a Dangerous…, 450 (+6 more)
- QUESTION: Worth chasing how the German Council report’s expectations idea interacted with the Bundesbank’s independent-monetary stance in that period.
Broader Connections
- Austerity survived Keynesian dominance only in the German-speaking world
#corroborates(0.85) — Mark Blyth, Austerity, 352 - German neoliberal economists shaped policy from the republic’s founding through the 1980s turn
#expands(0.80) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 654 - Broader neoliberal shifts enabled austerity’s return to economic common sense
#complicates(0.75) — Mark Blyth, Austerity, 406 - Austerity’s core principles predate the twentieth century by a century of classical economics
#contradicts(0.72) — Clara E. Mattei, The Capital Order, 718