Fiscal contraction is contractionary, period.

In contrast, QE3 will be associated with a fiscal contraction, possibly even a large fiscal cliff.

But Keynesianism involved continued fiscal expansion, with no offsetting monetary contraction.

Forecasters assumed that monetary expansion would provide an effective antidote to fiscal contraction.

At the same time, it spares an already weak economy damaging fiscal contraction in the short run.

Although the new tax law is generally described as a fiscal stimulus, it is more accurate to say that it avoids a large immediate fiscal contraction.

It misjudged the consequences of fiscal consolidation and credit constraints, underestimating the contraction of employment and overestimating exports and privatization receipts.

Indeed, this was the trap faced by Argentina in 1998 2001, when needed fiscal contraction exacerbated recession and eventually led to default.

Given synchronized fiscal retrenchment in most advanced economies, another year of mediocre growth could give way to outright contraction in some countries.

The prospect of a disorderly fiscal contraction needs to give way to a more rationally designed approach that avoids undermining the fragile recovery.

Indeed, just a year or two ago, expansionary fiscal contraction was all the rage, and a massive research effort went into proving its existence.

On paper, at least, this sizeable threat involving blunt fiscal contraction amounting to some 4 of GDP should have properly aligned incentives in Washington, DC.

Premature fiscal contraction and or withdrawal of countercyclical measures threaten the public support that is essential to promoting recovery among those hardest hit by the crisis.

China s Inscrutable Contraction

First, front loaded fiscal austerity however necessary is accelerating the contraction, as higher taxes and lower government spending and transfer payments reduce disposable income and aggregate demand.

The Second Great Contraction

The love has been very tough indeed, generating rapid economic contraction, massive unemployment (upwards of 50 among young people), and continued fiscal deterioration, owing to rising debt service costs.

The worry is that, at least in some cases, the IMF will go back to its old failed recipes fiscal and monetary contraction, which would only increase global inequities.

Second, the troika based its programs on overly optimistic assumptions. It misjudged the consequences of fiscal consolidation and credit constraints, underestimating the contraction of employment and overestimating exports and privatization receipts.

The United States economy is currently growing at 1.5 per year (about a full percentage point less than potential), and growth may slow, owing to a small fiscal contraction this year.

The Great Contraction of 2008 2009

Sudden fiscal contraction would reduce domestic aggregate demand faster than the economy s deleveraging and structural shifts could replace it, thereby killing off growth and hiring, with adverse feedback effects on budget deficits.

According to computations by the economist Paul van den Noord, the net result of the 1937 budget was a fiscal contraction amounting to three percentage points of GDP certainly not a trivial amount.

This contraction has become even more severe since then.

This threatens to aggravate the damaging contraction of global trade.

The ensuing losses will aggravate the financial turmoil and economic contraction.

After many years of contraction, investment in construction also will rise slightly.

But, in a Great Contraction, problem number one is too much debt.

The period of gravitational contraction lasts about 10 to 15 million years.

Then We draw it in towards Ourselves , a contraction by easy stages .

Finally, those who view the Great Depression as fundamentally a product of tight fiscal policies and Treasury orthodoxy overlook the much greater culpability of a fixed exchange rate regime for the transmission of bad monetary policy, and thus for fueling the contraction.

Following the German economy s sharp contraction in the last quarter of 2012, the question for the country today is whether it can avoid a technical recession (defined as two consecutive quarters of economic contraction).

First, there is the counterfactual case How would Japan s economy have performed in the absence of fiscal stimulus? Given the magnitude of the contraction in credit supply following the financial crisis of the late 1990 s, it is no surprise that government spending failed to restore growth.

Even though the British government s credit is still solid gold, Prime Minister David Cameron s administration is about to embark on what may be the largest sustained fiscal contraction ever a plan to shrink the government budget deficit by 9 of GDP over the next four years.

The latest estimates for Italy and Spain project a deeper contraction, prolonged into next year.

And emerging markets will suffer once the US contraction and global slowdown undermines commodity prices.

The maximum rate of economic contraction a veritable freefall came in the last quarter of 2008.

In 2004, for example, Chad s 39.4 annual growth rate contrasted sharply with Zimbabwe s 6.8 economic contraction.

A more accurate, if less reassuring, term for the ongoing crisis is the Second Great Contraction.

This contraction of the job market has had a greater impact on youth than on adults.

All of this, according to Reinhart and Rogoff, involves a protracted and pronounced contraction in economic activity.

Nevertheless, the legacy of the huge contraction in credit is not likely to go away anytime soon.

There is a real possibility that global growth will register its first contraction since World War II.

Even if a bailout plan were implemented quickly which appears increasingly unlikely there would be some credit contraction.

Default likely would be accompanied by severe economic contraction Argentina s GDP fell 15 after it defaulted in 2002.