A decade ago, Alberto Alesina was one of the most influential economists in the world. His theory of “expansionary austerity”—the paradoxical notion that reducing public expenditure would lead to an increase in economic activity—was one of the hottest ideas in macroeconomics. He claimed to have shown that government surpluses could actually boost growth, but only if they were achieved via spending cuts rather than tax increases. At a moment when many governments were seeking Keynesian remedies to a global recession, his work (along with fellow Harvard economist Silvia Ardagna) reassured conservatives that there was no conflict between keeping up demand in a crisis and the longer-term goal of reining in the public sector. Not surprisingly, his ideas were taken up by right-wing politicians both in Europe and in the U.S., where he was widely cited by the Republicans who took control of the House in 2010. Along with the work of Carmen Reinhart and Kenneth Rogoff on the supposed dangers of excessive government debt, Alesina’s work provided one of the key intellectual props for the shift among elite policymakers toward fiscal consolidation and austerity
