The IMF Admits It Was Wrong About Keynesianism

http://www.businessinsider.com/imf-admitted-their-economists-were-wrong-2013-1



"In an important new study, Olivier Blanchard, the Chief Economist at the International Monetary Fund (IMF), has just admitted that having respected and accepted the advice of conservative economists has turned out to be a blunder."


"The new “IMF Working Paper,” titled “Growth Forecast Errors and Fiscal Multipliers,” prepared by Blanchard and Daniel Leigh of their Research Department, reports that whereas the IMF had been accepting conservative economists’ estimates that the multiplier was “about 0.5” percent growth, the “actual multipliers were substantially above 1 early in the crisis,” which was the period when the IMF was recommending and pursuing “fiscal consolidation,” which is called in the United States “austerity.”

In other words, the policy recommended by the Republican Party’s economists, and which has actually been tried especially in Europe, has failed miserably."



"Here in the U.S., a similar recent study was done by the research arm of the U.S. Congress. That study covered only the U.S. economy, and it focused like a laser on only U.S. economic history. The specific question it examined was whether economic growth has been spurred in the United States by cutting taxes for the rich and introducing austerity for the nation-as-a-whole by the Federal Government, or whether such economic policies have failed to generate economic growth in this country.

It found that they have failed."




There's an interesting book linked to at the end of the article. I haven't read it but I put it on my reading list.

"They're Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010"
http://www.amazon.com/Theyre-Not-Even-Close-Democratic/dp/1880026090/ref=sr_1_9?ie=UTF8&qid=1339027537&sr=8-9