Alexander EIchler of the Huffington Post summarizes the article: “The report, published in the new issue of Finance & Development, the IMF's quarterly magazine, argues that moving too rapidly to enact so-called austerity measures -- in other words, taking steps to shore up national finances and bring down debt by cutting spending and raising taxes -- will hurt income in the short term and worsen unemployment in the long term.”
And, Brad Plumer of the Washington Post writes that “More specifically, an austerity program that curbs the deficit by 1 percent of GDP reduces real incomes by about 0.6 percent and raises unemployment by almost 0.5 percentage points. What’s more, the IMF notes, the losses are twice as big when the central bank can’t cut rates (a good description of the present.) Typically, income and employment don’t fully recover even five years after the austerity program is put in place. There’s also a class dimension here: A deficit cut of that size tends to cause real wage income, where lower-income folks get their money, to shrink by 0.9 percent, whereas rents and profits, which higher-income folks depend on, decline by just 0.3 percent. And, as the chart on the right shows [below, Chart 4], profits tend to bounce back faster than wages.”
Read full article on the IMF website.
