@techreport{NBERw3844,
 title = "Trigger Points and Budget Cuts: Explaining the Effects of Fiscal Austerity",
 author = "Giuseppe Bertola and Allan Drazen",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "3844",
 year = "1991",
 month = "September",
 URL = "http://www.nber.org/papers/w3844",
 abstract = {We propose and solve an optimizing model which explains counterintuitive effects of fiscal policy in terms of expectations. If government spending follows an upward-trending stochastic process which the public believes may fall sharply when it reaches specific "target points," then optimizing consumption behavior and simple budget constraint arithmetic imply a nonlinear relationship between private consumption and government spending. This theoretical relation is consistent with the experience of several countries.},
}