The history of economic development cannot be understood without the importance of recession periods. Recessions are often the result of the excess accumulated in previous years. Creative destruction after a period of excess used to drive a stronger recovery and continued economic development. That was until risky assets became the biggest concern for policymakers.

In October, the governments of Austria and The Netherlands warned of the risk of a “great blackout”. Soaring natural gas prices, lack of security of supply and a challenging outlook of pipeline deliveries from Russia made the governments exceedingly nervous about the chances of providing cheap and reliable energy for homes in winter.

However, an unexpected ally has prevented an energy crisis in Europe and, ironically, it is an ally that was banned in most European nations: Shale gas.  

The United States December jobs report shows that the labor market remains weak.

The headline 3.9% unemployment rate looks positive, but job creation fell significantly below consensus, at 199,000 in December versus a consensus estimate of 450,000.

This paper was published in the Journal Of New Finance.

Increasing Taxes or Spending Cuts: What Is More Effective for Fiscal Consolidation?

Dr. Daniel Lacalle, Author of “Freedom or Equality”, “Escape from the Central Bank Trap”, “The Energy World Is Flat” and “Life in The Financial Markets”.

Assistant Research: Daniel Rodríguez Asensio

Keywords: Taxation, Tax Competition, Global Economy, Keynesian Model, Tax Policy, Aggregate Demand, Aggregate Supply, Fiscal Policy, Monetary Stimulus, Central Banks, Government, Crisis, Recovery, Demand-Side, Supply-Side.

JEL Classification: E12, F15, F41, H21, H87, E52, E58, H68, H25, H30, H51