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By Martin Feldstein
Published: July 22 2010 17:37 | Last updated: July 22 2010 17:37
Critics of the European countries' decisions to front-load their deficit reductions miss the importance of seizing the current moment of crisis to take politically difficult budget actions.
The austerity debate
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If the timing of the fiscal consolidation were just a technical economic problem, the right policy would be to enact a multi-year budget that starts with little or no deficit reduction for the first two years, followed by a rapid return to budget balance. The slow start would be particularly appropriate in those countries where aggregate demand is now very weak.
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