However, politicians need not fear making these cuts because, according to these econometric results, states that cut “grow one percent faster than the G7 countries” while “business investment as a share of GDP rises by a full 1% point” and competitiveness improves. Tax increases, in comparison, cause the failing cases of adjustment. When done correctly, on the expenditure side “the good news is that major fiscal adjustments do not cause major recessions.” Moving beyond the cases of Denmark and Ireland, and dealing with the negative cases in a way that reinforced the message that cuts lead to growth, Alesina and his collaborators were laying the groundwork among neoliberal economists for expansionary austerity to be seen as “the new normal” rather than the policy exception.

Mark Blyth, Austerity, loc. 462