Pete Peterson Linked Economists Caught in Austerity Error. A team of economists at the Political Economy Research Institute (PERI) at UMass Amherst broke a huge story this week that was promptly picked up by the New York Times, the Washington Post, the Financial Times, and newspapers around the globe. The economists proved that the essential underpinning "of the intellectual edifice of austerity economics," as Paul Krugman put it, is based on sloppy methodology and spreadsheet coding errors.
Reinhart-Rogoff Study Debunked Kenneth Rogoff and Carmen Reinhart Three years ago, Harvard economists Carmen Reinhart and Kenneth Rogoff released a study that presented empirical evidence from 44 nations over a 200 year time span to demonstrate that countries with a public debt over 90 percent of GDP (the United States is at about 100 percent, Japan at 200 percent) have average growth rates one percent lower than other nations. Forty-four countries, 200 years, Harvard -- pretty convincing, huh? Except it was wrong. Pete Peterson's Fingerprints Bankrupt Analysis. PERI: : Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogo ff.
Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogo ff Abstract:Herndon, Ash and Pollin replicate Reinhart and Rogoff and find that coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth among 20 advanced economies in the post-war period. They find that when properly calculated, the average real GDP growth rate for countries carrying a public-debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0:1 percent as published in Reinhart and Rogo ff.
That is, contrary to RR, average GDP growth at public debt/GDP ratios over 90 percent is not dramatically different than when debt/GDP ratios are lower. The authors also show how the relationship between public debt and GDP growth varies significantly by time period and country. Media requests: please contact Debbie Zeidenberg. U.S. faces 2013 recession after ‘fiscal cliff’: CBO. By Agence France-PresseTuesday, May 22, 2012 19:19 EDT WASHINGTON — The United States faces a likely recession next year if Congress fails to stop scheduled spending cuts and tax hikes in January, congressional budget analysts warned Tuesday. The nonpartisan Congressional Budget Office said that if currently mandated fiscal conditions are implemented — what some observers call a “fiscal cliff” — the economy would contract at an annual rate of 1.3 percent in the first half of 2013. That downturn “would probably be judged to be a recession,” the agency said in a report.
The CBO predicted the economy would rebound in the second half of the year, to an annual pace of 2.3 percent, leaving full-year gross domestic product growth of just 0.5 percent. That was substantially weaker than the CBO’s January forecast for a 1.1 percent GDP expansion in 2013. It fell into place when both parties could not agree on a broader deal to adjust the country’s fiscal hole over the longer term. Agence France-Presse. Could this time have been different? (KEVIN LAMARQUE - REUTERS) Christina Romer had traveled to Chicago to perform an unpleasant task: she needed to scare her new boss. David Axelrod, Barack Obama’s top political adviser, had been very clear about that.
He thought the president-elect needed to know exactly what he would be walking into when he took the oath of office in January. But it fell to Romer to deliver the bad news. So Romer, a preternaturally cheerful economist whose expertise on the Great Depression made her an obvious choice to head the Council of Economic Advisers, gathered her tables and her charts and, on a snowy day in mid-December, sat down to explain to the next President of the United States of America exactly what sort of mess he was inheriting. Axelrod had warned her against pulling her punches, and so she didn’t. But Romer wasn’t trying to be alarmist. The next challenge was to persuade Congress.
There was only one problem: It was wrong. The issue is the graph on Page 1. This time is different It wasn’t. Who bankrolls the Super Congress? The Super Congress has its work cut out: Twelve lawmakers have been tapped to identify more than $1 trillion in spending cuts in an autumn marathon never before seen in Washington. Democratic Sen. Patty Murray of Washington and Republican Rep. Jeb Hensarling of Texas will co-chair the committee, with a backup chorus of lawmakers representing the full political spectrum. Every member of the Super Congress comes with a history of political patrons and connections with special interests.
The Center for Public Integrity's iWatch News has produced an in-depth look at their involvement with the gears that make Washington work, often to the consternation of the public and government watchdogs. The committee must come up with $1.5 trillion or more in budget savings over the coming decade, enough to match increases in the government's ability to borrow enough money to pay its bills through the beginning of 2013. There are powerful incentives for the Super Congress to reach agreement. Text of S&P downgrade of U.S. rating. WASHINGTON (MarketWatch) — The following is the text of Standard & Poor’s downgrade of the United States:See related story. “TORONTO (Standard & Poor’s) Aug. 5, 2011–Standard & Poor’s Ratings Services said today that it lowered its long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’.
Standard & Poor’s also said that the outlook on the long-term rating is negative. At the same time, Standard & Poor’s affirmed its ‘A-1+’ short-term rating on the U.S. In addition, Standard & Poor’s removed both ratings from CreditWatch, where they were placed on July 14, 2011, with negative implications. The transfer and convertibility (T&C) assessment of the U.S. –our assessment of the likelihood of official interference in the ability of U.S. /conga/story/misc/dc.html303446 The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. National Commission on Fiscal Responsibility and Reform. A Victory, and a Knife in the Side By MICHAEL POWELL Funding for Mayor Bill de Blasio’s prekindergarten initiative came with a lesson in the politics of Albany and Gov.
Andrew M. Cuomo. April 3, 2014, Thursday Okla's Coburn Leaves Mark as Tireless Budget Hawk By THE ASSOCIATED PRESS A political maverick nicknamed "Dr. January 17, 2014, Friday Seeking Lessons From the Fiscal Crisis With developments moving quickly in Washington, readers step back to offer their thoughts. October 17, 2013, Thursday More Than 350 Economists Back Yellen for Fed Chair More than 350 economists have a signed a letter to President Barack Obama calling on him to nominate Federal Reserve Vice Chair Janet Yellen to be the Fed's next chairman.
September 11, 2013, Wednesday Deficit Deal a Long Way From Reality By ALBERT R. As the leaders of an advisory panel appointed by President Barack Obama move to the right on some of their positions and as Republicans lawmakers dig in, chances of compromise on the budget are slim. By R. Alan Simpson: Cutting Social Security Benefits to “Take Care of the Lesser People in Society” Each time the Catfood Commission holds its secret meetings, Alex Lawson of Social Security Works has been outside with his camera, shooting video of the closed front door as FDL runs a live stream on our front page. The Washington Post wrote it up recently. As committee members go in and out of the room Alex asks them questions when he can, and yesterday he had an exchange with Alan Simpson that was…well, extraordinary. Simpson is apparently a graduate of the Bobby Etheridge school of charm. Alex Lawson was incredibly respectful and polite as the crankly Simpson berated, interrupted and cussed him.
CJR’s Trudy Lieberman recently ran down Simpson’s history of delicate statements on the subject of Social Security. Despite Simpson’s assertions, raising the retirement age to 70 IS a benefit cut. Erskine Bowles has returned to run the same play he ran during the Clinton administration, when he negotiated the secret deal between Bill Clinton and Newt Gingrich to cut Social Security benefits. The US debt: Who we owe (and who got us here in the first place) in a simple chart. Adding to the deficit: Bush vs. Obama. Culture Connoisseur Badge Culture Connoisseurs consistently offer thought-provoking, timely comments on the arts, lifestyle and entertainment. More about badges | Request a badge Washingtologist Badge Washingtologists consistently post thought-provoking, timely comments on events, communities, and trends in the Washington area. Post Writer Badge This commenter is a Washington Post editor, reporter or producer.
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