Moreover, the IMF itself had previously been prejudiced against Keynesianism, and now even admitted it, and basically apologized for that. On 5 January 2013, I headlined, at businessinsider, “The IMF Admits It Was Wrong About Keynesianism,” and I linked there to the new “IMF Working Paper” from their chief economist Olivier Blanchard with Daniel Leigh, titled “Growth Forecast Errors and Fiscal Multipliers.”
Their new study found that the IMF had systematically and consistently underestimated the Keynesian multiplier, and had thus wrongly assumed the correctness of conservative economists’ rejection of Keynesianism.
Their comprehensive new study confirmed Keynesianism: “We find that, in advanced economies, stronger planned fiscal consolidation [commonly called ‘austerity,’ the opposite of Keynesianism] has been associated with lower growth than expected.” But such “austerity” was now being sought by congressional Republicans.
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