Growth forecast errors during the euro crisis: what was the cause?, 11 March

What was the cause of the serious growth forecast errors during the Euro crisis? According to the former IMF Chief economist Olivier Blanchard it was an underestimation of the “Keynesian multipliers”, which also led to understate the contractionary effects of austerity. Alberto Alesina, Carlo Favero and Francesco Giavazzi aim for a confutation of this argument and in their new book suggest an alternative interpretation. Emiliano Brancaccio and Fabiana De Cristofaro - author and co-author of “Anti-Blanchard Macroeconomics” - take side with the French economist this time, providing new empirical evidence that supports his point.