News briefs

Government-austerity hawks rely on flawed research

Policymakers pushing government austerity in the United States and Europe have been relying on research riddled with errors, a bombshell new academic study claims.

In a new paper, researchers from the University of Massachusetts set out to reconstruct the findings of an influential 2010 study by Harvard economists Carmen Reinhart and Ken Rogoff, which claimed that economic growth slowed fairly dramatically for countries whose public debt crossed a threshold of 90 percent of gross domestic product.

Reinhart and Rogoff’s study has been used by politicians to justify reducing government debt by slashing spending and cutting jobs.

The University of Massachusetts researchers say they were able to re-create Reinhart and Rogoff’s findings only by leaving out big, important pieces of information, including years of data that showed Australia, Canada and New Zealand enjoying high economic growth and high debt at the same time.

“If facts mattered in economic policy debates, this should be the cause for a major reassessment of the deficit-reduction policies being pursued in the United States and elsewhere,” said Dean Baker of the Center for Economic and Policy Research.

New York Magazine, April 18
Huffington Post, April 16
The New York Times, April 16

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