Stephen Gordon at the world’s top Canadian economics blog has an excellent post on Canada’s early nineties recession and subsequent austerity and deficit reduction.
One point, the public sector cuts didn’t come until the private sector was recovering:
The other is that growth was strongly export-oriented. Which sometimes gets talked about by stimulus proponents as if it’s some kind of cheating strategy. It’s not. Small countries that are hit by adverse shocks are well-advised to pursue export-oriented growth. But you can’t do this on a global basis. Uncompetitive southern European economies can’t pursue export-led growth while the US also does so, but Germany and Japan and China all also stick with export-oriented strategies. India can’t consume all that stuff. The world needs more demand.