Massachusetts Economists Discredit Influential Austerity Study
Economists from the University of Massachusetts appear to have debunked a Harvard paper that right-wing politicians have used to push economic austerity policies. The challengers explain where the Harvard economists went wrong in an interview with The Real News Network.
Economists from the University of Massachusetts appear to have debunked a Harvard paper that right-wing politicians have used to push economic austerity policies. The challengers explain where the Harvard economists went wrong in an interview with The Real News Network.
In 2010, Carmen Reinhart and Kenneth Rogoff claimed to show that economic growth stops and sometimes reverses when public debt reaches a level equal to about 90 percent of GDP. Their paper profoundly shaped public policy. The authors appeared before the Senate Budget Committee and the study was a centerpiece in Congressman Paul Ryan’s “Path to Prosperity” budget plan for 2013.
Massachusetts professors Thomas Herndon, Michael Ash and Robert Pollin criticized Reinhart and Rogoff’s findings in a study of their own. In an attempt to duplicate R&R’s results, they discovered what Reinhart and Rogoff are calling a coding error that omitted several countries from an Excel spreadsheet of historical data used in the calculations. Another found the Harvard calculations selectively excluded data that would have produced different results had they been included. The correct results, calculated by the Massachusetts team, canceled out Reinhart and Rogoff’s conclusion.
What the Massachusetts professors determined was that growth was only modestly diminished when countries approached the 90 percent public debt-to-GDP ratio, and that debt is just one of many factors involved in determining whether an economy grows or shrinks.
“There is no cliff,” Michael Ash told The Real News Network. “That there is no precipitous drop in growth is the most important message of our replication.”
Nobel Prize-winning economist Paul Krugman confirmed Reinhart and Rogoff were mistaken.
Read a transcript of the interview below here.
— Posted by Alexander Reed Kelly.
TheRealNews:
Your support matters…Independent journalism is under threat and overshadowed by heavily funded mainstream media.
You can help level the playing field. Become a member.
Your tax-deductible contribution keeps us digging beneath the headlines to give you thought-provoking, investigative reporting and analysis that unearths what's really happening- without compromise.
Give today to support our courageous, independent journalists.
TD Original
An historic progressive coalition looks to change the course of politics on the island.
Social Justice
As many as 70,000 child care centers are projected to close in the next several months as pandemic-era federal funding ends, pushing an industry already in crisis to a breaking point.
The budget proposal offers a terrifying preview of what we can expect from Trump if he wins another four years in office.
The former mayor of South Bend, Indiana, draws fire for claiming it's "not fashionable in progressive circles" to talk about the deficit.
Iraqis are demanding an end to corruption and sectarianism, while also objecting U.S. troops and Iranian influence.
From Chile to Iraq, popular uprisings against austerity and corruption are spreading like wildfire at a crucial point in history.
You need to be a supporter to comment.
There are currently no responses to this article.
Be the first to respond.