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Questions related to tools and controversies around Fiscal policy Explain how fiscal austerity (i.e., reducing the primary fiscal deficit) can reduce Debt/GDP or increase Debt/GDP.

Questions related to tools and controversies around Fiscal policy

  1. Explain how fiscal austerity (i.e., reducing the primary fiscal deficit) can reduce Debt/GDP or increase Debt/GDP. Explain also why, the more crowding out there is, the more we expect fiscal austerity to reduce Debt/GDP.
  2. Explain why a country's Debt/GDP can decrease even while it runs primary fiscal deficits

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