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In a stunning rebuke to the conventional wisdom, austerity has come to dominate economic policymaking in the last three years. Traditionally, governments resorted to Keynesian measures to prime the pumps during recessions and compensate for falling demand. During the most recent economic downturn, governments have embraced austerity instead, compounding the contractionary pressures.

This new logic has been justified by the work of two Harvard University economists, Ms. Carmen Reinhart and Mr. Kenneth Rogoff, who studied the historical record and concluded that “traditional debt management issues should be at the forefront of public policy concerns.”

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