Economy
Related: About this forumDebt, Growth and the Austerity Debate
By CARMEN M. REINHART and KENNETH S. ROGOFF
(seeking to resurrect their reputations)
Last week, three economists at the University of Massachusetts, Amherst, released a paper criticizing our findings. They correctly identified a spreadsheet coding error that led us to miscalculate the growth rates of highly indebted countries since World War II. But they also accused us of serious errors stemming from selective exclusion of relevant data and unconventional weighting of statistics charges that we vehemently dispute. (In an online-only appendix accompanying this essay, we explain the methodological and technical issues that are in dispute.)
Our research, and even our credentials and integrity, have been furiously attacked in newspapers and on television. Each of us has received hate-filled, even threatening, e-mail messages, some of them blaming us for layoffs of public employees, cutbacks in government services and tax increases. As career academic economists (our only senior public service has been in the research department at the International Monetary Fund) we find these attacks a sad commentary on the politicization of social science research. But our feelings are not whats important here.
The authors of the paper released last week Thomas Herndon, Michael Ash and Robert Pollin say our findings have served as an intellectual bulwark in support of austerity politics and urge policy makers to reassess the austerity agenda itself in both Europe and the United States.
A sober reassessment of austerity is the responsible course for policy makers, but not for the reasons these authors suggest. Their conclusions are less dramatic than they would have you believe.
http://www.nytimes.com/2013/04/26/opinion/debt-growth-and-the-austerity-debate.html?hp
LiberalAndProud
(12,799 posts)However, when you can't figure out how to code an Excel spreadsheet, I tend to doubt your ability to evaluate the global economy. I'm prejudiced like that.
golfguru
(4,987 posts)On other side of coin, which country solved over-extended debt problem with more debt?
elleng
(130,865 posts)golfguru
(4,987 posts)TIA.
elleng
(130,865 posts)and as I understand it, that is NOT a correct equation.
http://krugman.blogs.nytimes.com/2013/04/26/grasping-at-straw-men/
in the past few weeks that policymakers have dramatically changed their tune. The latest IMF World Economic Outlook, released last week, warned several European countries, including the UK, to rethink their austerity plans. IMF chief, Christine Lagarde, had previously given consistent and clear support to the UKs aggressive fiscal austerity plans but has now changed her mind. This lady has done a U-turn.
In addition, the President of the European Commission, José Manuel Barroso, said earlier this week that, while further consolidation and reform efforts are required, such an approach had reached its limits in many aspects.
It is difficult to argue with this. At some point, fiscal consolidation becomes self-defeating: raise taxes too much and household income and spending fall and, in turn, tax revenues fall. That seems to be the case in Europe at the moment. Unemployment in Greece and Spain is above 25%, and in Portugal it is not far off 20%. Without some growth boosting measures, unemployment will continue to rise and it will be even more difficult to bring down debt ratios. Troika advice should now focus not on fiscal consolidation measures, but on structural reforms designed to improve flexibility in the labour markets and improve productivity and on fiscal stimulus.
Hopefully, Reinhart and Rogoffs blushes will accelerate the case for growth, not austerity.
http://blog.principal.com/2013/04/25/europe-changes-its-tune-on-growth-vs-austerity/
golfguru
(4,987 posts)are all drowning in debts. What will cure their situation in you opinion?