By contrast, the opposition proposes, sensibly, to borrow to finance capital expenditure, thereby aiming at a more expansionary policy than intended by Osborne.
Larry Summers' claim last year that the whole idea of an expansionary fiscal contraction is "oxymoronic" looks to have been right.
The comparison between the US and Europe is telling: monetary policy has been far more proactive and expansionary in the US than it has been in the eurozone, which helps to explain the disparity in growth and unemployment rates.
Second, the chancellor is an ardent believer in expansionary fiscal contraction: the idea that as you retrench the public sector, the private sector will automatically and immediately step in to fill the gap.
To speed up growth, Berlin was urged by the EU commission on Wednesday to spend some of its budget surplus and adopt expansionary policies.
The idea of expansionary fiscal contraction has been exposed as total nonsense," said Ed Balls, the shadow chancellor.
The 2001 recession might have ended the bubble, but the Federal Reserve decided to pursue an unusually expansionary monetary policy in order to counteract the downturn.
Mr Bergsten believes that EMU governments, having given up monetary policy, might pursue an expansionary fiscal policy in spite of their "stability pact", which is intended to prevent such laxity.
And, as Mr Yglesias might argue, one could certainly imagine that local banks might be hypersensitive to any inflationary risk in expansionary monetary policy, and insufficiently interested in taking steps to get more Americans employed.But then you've got the Class B and C directors, who cannot be officers or employees of any bank.
A paper he wrote with Roberto Perotti concludes:[F]iscal adjustments which rely primarily on spending cuts on transfers and the government wage bill have a better chance of being successful and are expansionary.
Sad to say, Burns, it appears from these recordings, did rather a lot to oblige.At the December meeting, for example, the Fed opted for a more expansionary monetary policy, even after a cut in rates announced a few days before.
