Mixing oil and water: can growth and austerity coexist?
Governments around the world have been dealing with the financial crisis through massive fiscal expansion in order to prevent a severe recession and surge in unemployment. Now the time has come to pay, but most Western economies have not yet found the path to sustainable growth, which will allow them to deal with their huge debts. En route, they are trying to reduce their deficits under conditions of unforgiving financial markets which do not permit deviating from the rigid fiscal targets set (or imposed on them). On the other hand, it is clear that in some countries, extreme austerity programs are killing growth, as IMF Managing Director Christine Lagarde has put it. The new reality that characterizes the fiscal crisis, which does not appear to be temporary, creates major policy questions which threaten to undermine economic foundations. They include: How to create growth under austerity policies? Can growth and austerity coexist? How can growth be encouraged when it is not possible to apply fiscal policies? How can investor confidence in government bonds be restored? Does the debt crisis threaten the financial system? How can society deal with the budget cuts? Is extreme austerity liable to bring radical regimes to power? Should taxes be raised? How is it possible to correct fiscal mistakes without exacerbating inequality? What is the function of structural reform on this matter?

participants:

Prof. Myron Scholes, Nobel Laureate in Economic Sciences.
Dr. Peter Jarrett, Head of Division, Economics Department, OECD

Dr. Yuval Steinitz, Minister of Finance

Introduction & Moderator: Hagai Golan, Editor-in-Chief, Globes