During post-2008 fiscal consolidation, the costs of high public debt were overestimated and fiscal multipliers were underestimated, understating the output costs of austerity.

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• The main obstacle to sound fiscal policy debate is a widespread, quasi-religious belief that public debt is inherently bad. OBOlivier Blanchard1 Jun 2022public debtfiscal policy
• Automatic fiscal stabilizers give fiscal policy an advantage over monetary policy in stabilizing output because they act faster. OBOlivier Blanchard1 Jun 2022fiscal policy
• Fiscal multipliers vary across time and place but are generally nonzero, positive for spending, negative for taxes, and larger when monetary policy cannot offset them. OBOlivier Blanchard1 Jun 2022fiscal policy
• The lower a country's neutral interest rate, the smaller the fiscal and welfare costs of public debt and the larger its welfare benefits. OBOlivier Blanchard1 Jun 2022public debt
• When safe interest rates are expected to remain below growth rates for a long time, rolling over public debt without later tax increases is feasible and public debt may carry no fiscal cost. OBOlivier Blanchard11 Feb 2019public debt

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