Out of all models known to the author, Blanchard's Model (1990) puts the strongest emphasis on the significance of the initial state of public finance to the occurrence of non-Keynesian effects along with tightening of the fiscal policy. The analysis performed by Blanchard covers only the results of fiscal adjustment by means of raising taxes. Without making any reference to the effects of reduction in public spending, he suggests that if the state of public finance is "bad enough", the method of balancing it is of little relevance to the trend in movements of the total demand. Thus, it has been examined whether the method of reining in deficit is really insignificant, under the assumption that Blanchard's model appropriately reflects relations ocurring in the economy.

Such an examination is undertaken in the second part of the article. The first part serves as an introduction to the more complex analysis provided in the second part. The assumptions of the standard model are described and its solution is presented. The result obtained (change in total demand due to increase in taxes) serves as a benchmark for the effects of fiscal consolidation, as estimated in the following part of the paper, executed by constraining various types of public spending. An analysis of a thread of thoughts leading to certain results sometimes allows some additional conclusions, and this happens to be the case here. It has been demonstrated, for instance (Blanchard failed to explicitly indicate this in his article), that the tax rate range where the fiscal equilibrium restored via increased taxes could hike up private consumption is relatively narrow. The higher the taxes before the consolidation, the higher the risk that the critical point is reached by raising them. As a result, the levelling-off of public debt will involve a very high cost: decline in total demand sharper than that, which could stem from a possible short-sightedness of households, and - underlying that decrease - a sustained decline in the production level. Despite high taxes, this risk grows in line with the accelerating public debt growth.