In this year’s “World Economic Outlook”, the International Monetary Fund (IMF) has admitted a growth forecast mistake that clearly outlines the destructive effects of austerity in the European economy. The IMF has confirmed that the fiscal multipliers, used to estimate the impact of austerity policies, have been disastrously wrong.
Their economic assumption was that multipliers stood at about 0.5 – meaning that for every euro lost in government spending, 50 cents were cut from GDP. Now, the Fund claims that the miscalculation is so substantial that, in reality, “actual multipliers may be higher,...