Martin Wolf: Economics - Austerity loses an article of faith

The recent critique by Thomas Herndon, Michael Ash and Robert Pollin of the University of Massachusetts at Amherst makes three specific charges against the conclusions of Profs Reinhart and Rogoff: a simple coding error; data omissions; and strange aggregation procedures. After correction, they argue, average annual growth since 1945 in advanced countries with debt above 90 per cent of GDP is 2.2 per cent. This contrasts with 4.2 per cent when debt is below 30 per cent, 3.1 per cent when debt stands between 30 per cent and 60 per cent, and 3.2 per cent if debt is between 60 per cent and 90 per cent. In their response, Profs Reinhart and Rogoff accept the coding errors but reject the critique of aggregation. I agree with the critics for reasons given by Gavyn Davies. The argument that data covering a long period of high debt should count for more than data covering a short one is persuasive.

Mein Blog befasst sich in einem umfassenden Sinn mit dem Verhältnis von Wissen, Wissenschaft und Gesellschaft. Ein besonderes Augenmerk richte ich dabei auf die Aktivitäten des Medien- und Dienstleistungskonzern Bertelsmann und der Bertelsmann Stiftung.