Ukraine PM says will stick to austerity despite Moscow pressure

[jakeXT]

4. The fun part is, that the IMF knows it doesn't work

IMF: Austerity is much worse for the economy than we thought

...

How did the IMF figure this? That was the tricky part. Blanchard could have just plotted a simple graph showing that countries undertaking heavy austerity measures, such as Greece and Portugal, are faring more poorly than their peers. But that doesn't actually prove anything—perhaps those countries are undertaking austerity because they'd run into economic trouble.

So, instead, Blanchard did something more subtle. He studied the IMF's previous economic forecasts. If a country is already struggling for other reasons, the forecasters are likely to have taken that into account. And what Blanchard found was surprising: IMF forecasts have been consistently too optimistic for countries that pursued large austerity programs. This suggests that tax hikes and spending cuts have been doing more damage to those economies than policymakers expected. (Conversely, countries that engaged in stimulus, such as Germany and Austria, did better than expected.)

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/10/12/imf-austerity-is-much-worse-for-the-economy-than-we-thought/