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Spending cuts impose less economic damage than tax hikes

Among Ottawa and the 10 provinces, eight governments are currently in deficit, spending more than the revenues they collect. As Canadian governments seek to eliminate their budget deficits, they should take note of a new study by a group of fiscal policy experts, led by Harvard economics professor Alberto Alesina. In short, the study provides a roadmap about whether deficit fighting initiatives should focus on cutting spending or raising taxes.The study, published by the National Bureau of Economic Research, examines how the composition and timing of fiscal policies aimed at reducing government deficits affect the economy. Fiscal consolidations can differ

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