22 Dec 2011  The Rumors of Irish Austerity Are Greatly
Exaggerated  Economics, Krugman 60 Comments  A certain Nobel
laureate has been pounding the drums lately (e.g. here),
pointing out that the awful euro economies prove just how bad
fiscal austerity is. In particular, the case of Ireland shows
that–as our Keynesian friends like to put it–”contractionary
policy is contractionary.”  Now in fairness, for all I know
maybe lots of people have been pointing to Ireland as a shining
success story. I don’t know of any Austrians who have done so,
but maybe George Will or somebody has. (I come back to this in
the Appendix below.)  If so, then said austerians were being
sloppy, because Ireland at best is only relatively engaging in
austerity. Here are the figures for its government budget
surplus/deficit as a share of GDP:   So let’s review, to make
sure you know how to understand how a Keynesian uses these types
of labels. Herbert Hoover engaged in liquidationism, with his
last budget deficit of 4.5% of GDP plunging t