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The FT:

UPDATED: Is IMF pushing for an end to austerity?: After a meeting of EU finance ministers in Luxembourg, Olli Rehn, the European Commission’s economic chief, said he would read the IMF’s analysis on the way back to Brussels. But he cautioned that while the impact of austerity on growth was important to consider, it was also essential to take into account the “confidence effect” budget consolidation has. He pointed to Belgium, which has gone from market laggard to nearly a safe haven after implementing tough austerity measures earlier this year.

It is now 2012. European policymakers should know that the reason an economy as open as Belgium can do well by focusing on fiscal balance and financial prudence and let others worry about the overall level of aggregate demand and the sustainability of the system is that in an economy as open a Belgium the multiplier really is about 0.3, and thus the costs of austerity in Belgium to Belgium are low. And European policymakers should know that things are different in larger and less open European countries where the multiplier is 1.5--and that things are different for the eurozone as a whole where multipliers are even larger.

Until European policymakers recognize that extremely-open Belgium is not a relevant model, I recommend that they postpone their returns to Brussels and, instead, ascend Mt. Fuji, repeatedly, until they do recognize that extremely-open Belgium is not a relevant model.