Undertaking the necessary austerity measures at an early stage … allowed the Baltics to benefit from positive confidence effects … allowed Latvia to return to the financial markets well ahead of schedule … allowed growth to bounce back after exceptionally severe output contractions. … The concept of “expansionary contraction” has been used and criticized in the ongoing debate about growth and austerity. The Baltic experience provides an indication that this need not be an oxymoron: even if fiscal consolidation weighs on the growth prospects in the short term, it has sizeable positive effects in the medium to long term.

Mark Blyth, Austerity, loc. 592