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Recent global economic crisis has revived a longstanding debate whether government spending or austerity is the better way to stop financial downslide and to set economy straight. Two notably opposite schools of economic thought have crossed swords: one championing “honeyish” fiscal stimulus via increased government borrowing and spending, and another, advocating “tarry” public spending cuts. The major aim of this paper is to contrast and compare the working mechanisms behind spending and austerity measure...