Category Archive: Global Macro
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The Absolutely Final and Definitive Destruction of Reinhart And Rogoff
Two UMKC students have provided what I think is the most destructive empirical work to date on the simply awful book and articles by Reinhart and Rogoff that purported to find a magical debt ratio beyond which economic growth plummets to negative territory. They are Matthew Berg and Brian Hartley and their piece is at [...]
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Is Monetary Policy Capable of Offsetting Fiscal Austerity?
Mike Konczal has a new article where he claims there is a great natural experiment unfolding in the U.S. economy, one that Ramesh Ponnuru and I proposed back in 2011: We rarely get to see a major, nationwide economic experiment at work, but so far 2013 has been one of those experiments — specifically, an experiment to try and [...]
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Feedback Loops
Early this month Martin Wolf had another of his very interesting articles, this time on China, which I think suggests some of the concerns we must have about the upcoming adjustment. Wolf argues that it may be useful to think about Japan as a model for understanding the adjustment process in China since the Japanese model [...]
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Macroeconomic Policy in Europe, USA and Japan: A New Paradigm
Facts revealed in recent months, including in these columns, suggest that a substantial change in macroeconomic policy settings is required to save many economies from further man-made disasters: The IMF analysis (Blanchard and Leigh, 2013) showing multipliers have been underestimated. The De Grauwe and Ji analysis (2013) showing high levels of austerity increase public debt [...]
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It’s A Bit Early To Declare A Winner In The Economic Debate
Recently, Henry Blodget wrote that “The Economic Argument Is Over – And Paul Krugman Won.” The premise of the article is that the ongoing debate between economic schools of thought, since the financial crisis began, over what policies were necessary to get the domestic and international economies growing again has been resolved. “On one side were economists [...]
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The Colbert Report: R&R Austerity One Big Joke
Reinhart and Rogoff continue to pay the price for methodological flaws in their public debt research that has driven policy makers to implement austerity measures in DMs around the world. The latest econ commentator to pick up the issue is Stephen Colbert, who explored the reaction to a graduate student’s debunking of the original research: [...]
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Reinhart-Rogoff and Herndon-Ash-Pollin: A Few Further Comments
I made some comments on Sunday about a recent critique by Thomas Herndon, Michael Ash, and Robert Pollin of an influential 2010 paper by Carmen Reinhart and Kenneth Rogoff. Yesterday Econbrowser hosted a reply from Pollin and Ash to my remarks. Here I would like to add a few further thoughts on this discussion. Pollin and Ash first produce a graph that supports [...]
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Narrowing Spreads Fail to Lift Euro, Dollar Holds Below JPY100
There are two main developments today. The first is the disappointing flash PMI readings from China and the euro zone. The second is a continued rally in European bonds in both absolute terms and relative to Germany. The reduced risk premium in Europe has not coincided with gains in the euro, but to the contrary, [...]
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Reinhart-Rogoff Data Problems
The methods and conclusions of an influential paper by Carmen Reinhart and Kenneth Rogoff published in 2010 have recently been challenged by Thomas Herndon, Michael Ash, and Robert Pollin. Here I comment on both the details and broader significance of the dispute. Let me begin by stating what I perceive to be the core policy question: are high [...]
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The End of Growth?
Driven by massive monetary stimulus from central banks, the performance of financial markets, especially stocks, have decoupled from that of a moribund real economy. Financiers assume that the strong rise in equity markets anticipates a strong economic recovery. However, there are fundamental reasons why the world may be entering a period of low or no [...]
