Cutting back in times of economical crisis: harmful or effective?

Professor of Economics and Public Finance at Erasmus University Rotterdam Bas Jacobs and Minister of Finance Jeroen Dijsselbloem have very different opinions on this subject. The conversation between these two economical experts turned into an interesting one.

Dijsselbloem was interviewed by three experts at De Balie in Amsterdam, including Jacobs and Jort Kelder. Jacobs is one of the main critics of the governments economic policy. 'But I never give in!’, Dijsselbloem smiles.

‘Cutting back is harmful in times of recession, we’ve also seen this in The Netherlands.’, Jacobs states in the interview. ‘I’m aware of the fact this is economically foolish, but we had no choice. It was the political reality’, Dijsselbloem answered. Also, according to Dijsselbloem recovery and cutbacks did arise simultaneously.

Jacobs also stressed that the fiscal policy from 2011 until now led to a decrease of 6% of the gross domestic product, plus 350,000 fewer jobs. Dijsselbloem refutes this: 'The economy has recovered and improved since 2013. Countries that didn't cut back are not doing any better than Holland'. But according to Jacobs Dijsselbloem ignores contrasting conclusions from IMF and OECD way too easily. Jacobs was missing some economical arguments from Dijsselbloem in regard to the whole topic, he said afterwards.

Apart from the differences in their point of view, the two gentlemen seem to like and respect each other. Watch the whole event here.

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Source: De Balie

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