Austerity: Spending Cut Or Tax Increase?

Author: Abdul Jalil
Publication Year : 2021

John Maynard Keynes, the father of macroeconomics, said that “The boom, not the slump, is the right time for austerity at the Treasury”. In plain terms, austerity means cutting down expenditures. In economic jargon, austerity is a policy of by and large living within your means. Going into details, austerity implies reducing government deficits and stabilizing government debt, by cutting government expenditure or increasing revenues primarily through taxes – by curbing tax evasion or by increasing taxes.

The writer is the professor of Economics at PIDE, Islamabad

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