by Salim Furth
The Heritage Foundation
June 12, 2014
Scholarly research has long found that spending cuts are less harmful than tax increases when reducing deficits. The wide variety of fiscal policy approaches taken by European and other rich economies since 2007 corroborated the finding: Tax increases were deeply harmful. Tax increases were common in crisis countries like Greece, but were also common in non-crisis eurozone countries. In addition, countries that practiced fiscal discipline before the recession had greater flexibility and firmer recoveries. This Heritage Foundation Backgrounder summarizes the most important findings from a year of research on fiscal policy during the crisis years.

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