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Old 05-02-2013, 04:56 PM
 
31,385 posts, read 32,007,059 times
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After having their much touted paper which was alleged to show that high ratios of debt to GDP cause negative growth dismantled a trio of University of Mass. graduate students, Harvard economist Carmen Reinhart and Kenneth Rogoff back further away from their now discredited work.

Writing in an OP in the Financial Times;
To be clear, no one should be arguing to stabilise debt, much less bring it down, until growth is more solidly entrenched....

Nevertheless, given current debt levels, enhanced stimulus should only be taken selectively and with due caution. A higher borrowing trajectory is warranted, given weak demand and low interest rates, where governments can identify high-return infrastructure projects. Borrowing to finance productive infrastructure raises long-run potential growth, ultimately pulling debt ratios lower. We have argued this consistently since the outset of the crisis.
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Opinion | Latest Comment from the Financial Times

Here are aggregated stories take from them what you will, I've provided two ends of the spectrum.

Reinhart, Rogoff: Austerity Is Not the Only Answer

Reinhart, Rogoff Backing Furiously Away From Austerity Movement
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Old 05-02-2013, 04:59 PM
 
5,239 posts, read 2,664,171 times
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Quote:
Originally Posted by ovcatto View Post
After having their much touted paper which was alleged to show that high ratios of debt to GDP cause negative growth dismantled a trio of University of Mass. graduate students, Harvard economist Carmen Reinhart and Kenneth Rogoff back further away from their now discredited work.

Writing in an OP in the Financial Times;
To be clear, no one should be arguing to stabilise debt, much less bring it down, until growth is more solidly entrenched....

Nevertheless, given current debt levels, enhanced stimulus should only be taken selectively and with due caution. A higher borrowing trajectory is warranted, given weak demand and low interest rates, where governments can identify high-return infrastructure projects. Borrowing to finance productive infrastructure raises long-run potential growth, ultimately pulling debt ratios lower. We have argued this consistently since the outset of the crisis.
I apologize that the link is subscription only

Opinion | Latest Comment from the Financial Times

Here are aggregated stories take from them what you will, I've provided two ends of the spectrum.

Reinhart, Rogoff: Austerity Is Not the Only Answer

Reinhart, Rogoff Backing Furiously Away From Austerity Movement
Psssh. That's only scientific analysis.
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Old 05-02-2013, 05:40 PM
 
25,059 posts, read 23,087,058 times
Reputation: 11618
Keynesianism is on the right track, but they are wrong when it comes to stimulus. Stimulus need not me entirely on the federal budget, especially in the world of credit default swaps and credit rating agencies. What about credit stimulus? That was done during FDR's time, it worked then. Why wouldn't it work now?
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