Brad DeLong and Larry Summers are in the process of writing a paper about the effects of fiscal policy in a depressed economy. The paper will emphasize the special features of fiscal policy in a liquidity trap.
DeLong and Summers "argue at greater length, [that] [...] there is very little direct connection between spending over the next couple of years and long-run fiscal prospects. Between low borrowing costs and high multipliers, spending now would do little to worsen the debt picture a decade from now; indeed, as DeLong-Summers argue (and some of us have been arguing, less formally, for a while now), there’s a plausible case that spending more now actually improves the long-run fiscal picture — and that austerity worsens it."
This paper can be expected to trigger a lot of discussion and controversy in the academic and political world; especially in the US, but probably in Europe as well.
