More on Austerity and Keynes

It's tough to parse all the evidence in order to determine what the best course of economic policy is during a bad recession.  I've tried to present some evidence showing that stimulus measures and deficit spending works better than austerity.  That link focuses on the problems in Ireland and England, who have tried austerity and found it wanting.  Now here's Matt Yglesias with some results from Baltic countries, which also went with balancing their budgets instead of spending and have found themselves in a terrible near-depression.

But a correspondent of mine points out that the US, with its huge Keynesian spending, hasn't done so hot either.  But the point is to compare the results of different systems across time and country. Every country has done poorly during this period in history, but it's still useful to point out which countries have done relatively better and which have done relatively worse. So with the Baltics we have one data point, looking good for Keynes.
One thing I've been thinking after watching this great video is the point made by the Keynes character when he notes that Hayek's position during economic hardship is basically that government can't do anything useful and should essentially just let things play out, remove any regulation and taxation that is getting in the way, and then let the Invisible Hand do the work.

Well, that's kind of what Ireland and the UK and the Baltics are doing, at least in comparison to the Keynesian stimulus in the US. In the short term that has led to worse performance in those places in the US, though of course there could be other factors at play too. And maybe the conservative argument is that in the longer term this pain in the Baltics will be worth it, as the surviving institutions will be stronger and the moral hazard stuff will have been dealt with.

If one wants to successfully argue for austerity budgets in times of serious recessions, I think one needs to come up with some data that shows them working. I've been laying out data that supports stimulus such as the above links and of course my favorite historical example of the US in the 1930s and 1940s. I'd like to see some real-world examples of austerity working during a bad economic downturn.