An Economic Laboratory

Most countries in the world are subscribing to the idea that significant government stimulus is necessary for economic recovery. If these policies fail to live up to their predicted outcomes, then the response from stimulus proponents will be that things would have been much worse without the stimulus. However, at least one country (Ireland) is cutting expenditures. It will be interesting to see how Ireland performs in coming years relative to the United States and other countries. My bet is that in the long run it will fare much better; in the short run, it may fare worse, but not by much. It will be interesting to see if other countries adopt Ireland's policy.