Austerity
For example, after the Great Recession, austerity measures in many European countries were followed by increasing unemployment and debt-to-GDP ratios despite smaller budget deficits. When an economy is operating at or near capacity, higher short-term deficit spending (stimulus) can cause interest rates to rise. This results in a reduction in private investment. This then reduces economic growth. Where there is excess capacity, the stimulus can result in an increase in employment and output.