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Trying to make deficits exogenous by making the deficit itself a policy variable creates reflexivity that ends in disaster when private debt levels are high.
That puts Greece in rather a different position from early-1980s Britain, which had suffered high long-term rates for several years.The Greek austerity plan is as close as you can get to a real-time experiment: what happens to an economy when one policy variable is changed and others are fixed?
The main policy variable of interest is r ikt.
Robustness analysis corroborates the choice of the simultaneous rather than the lagged fiscal policy variable.
Replacing the non-lagged fiscal policy variable with its own lagged value leads to a non-significant coefficient (column 5).
Therefore, immigration policy became the critical policy variable under the control of the government (Díaz-Alejandro 1984).
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Neither is it clear how he might or might not change other monetary policy variables if he were to scale back purchases more quickly, which he might not.
ALMP comprises the active labour market policy variables.
Finally, I look at the migration policy variables.
Table A.1 presents the definition of policy variables measuring immigration policy regimes.
The policy cluster was computed in order to deal with the multicollinearity arising between policy variables.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com