Skip to main content

Rogaine and Braveheart on Austerity

More on the Reinhart and Rogoff debacle. It says a lot about the state of mainstream economics.

Comments

  1. Also check the interview to the hero. http://www.ritholtz.com/blog/2013/04/colbert-demolishes-reinhart-rogoff/

    ReplyDelete
  2. what does an excel mistake say about the state of macroeconomics?

    ReplyDelete
    Replies
    1. seriously dude?! did you watch the video. not just a mistake, but one that was used to justify austerity around the world. at best it says that lack of peer review and slopy standards are the norm at harvard, supposedly a serious place. but if you look deeper it says considerably more. lack of understanding of causality issues, serious lack of understanding of basic things that even neoclassical economists like Domar understood better about debt dynamics (read his 1944 paper). at worst it shows a certain disingenous behavior by mainstream academic economists. shameful. that's why rogaine and braveheart are the but of every joke, including colbert's.

      Delete
    2. Hey, in one post Domar's a Keynesian, but here he's neoclassical. Did he have an evil twin? :-)

      Delete
    3. Hi Calgacus. There is no contradiction. Yes Domar was both Keynesian and neoclassical. It was called neoclassical synthesis. Like modern New Keynesians, which are also neoclassical, the Keynesian features result from short run rigidities and imperfections. And neoclassical authors are not necessarily evil (some might be), what they are incoherent and at odds with the best evidence.

      Delete
  3. Australia is in the midst of an extended election campaign. The report linked to below was released last Tuesday by the Grattan Institute (an Australian "non-partisan" think-tank).

    Quotes from the Grattan report:
    "Some argue that high debt reduces economic growth... Their successors and financial institutions can then find it difficult to borrow at reasonable costs, and economic growth is often slow for a long time". (page 8)

    I won't go into the detail of the recommendations: check by yourselves.

    Also, check References and footnotes in that page. Herndon et al, by the way, are actually mentioned... in the footnote.

    Wednesday morning, by sheer coincidence, S&P announced its concern about Australia's fiscal position: a downgrade from the triple A rating is mentioned.

    That Wednesday evening, again by sheer coincidence, opposition leader Tony Abbott, after months avoiding TV interviews (rumour has it he suffers from the foot-in-mouth disease) was on TV: in 13 minutes he mentioned "surplus" eight times. You know, because the ratings, this; competitiveness, that.

    I guess Jeff Cox (senior writer, CNBC Net, April 17) was right: is not that Reinhart and Rogoff are influential (??!!), it's that their "research" has been "hijacked" by politicians (??!!)

    Grattan Institute report
    http://grattan.edu.au/publications/reports/post/budget-pressures-on-australian-governments/

    Conclude from this what you must.

    ReplyDelete

Post a Comment

Popular posts from this blog

A few brief comments on Brexit and the postmortem of the European Union

Another end of the world is possible
There will be a lot of postmortems for the European Union (EU) after Brexit. Many will suggest that this was a victory against the neoliberal policies of the European Union. See, for example, the first three paragraphs of Paul Mason's column here. And it is true, large contingents of working class people, that have suffered with 'free-market' economics, voted for leaving the union. The union, rightly or wrongly, has been seen as undemocratic and responsible for the economics woes of Europe.

The problem is that while it is true that the EU leaders have been part of the problem and have pursued the neoliberal policies within the framework of the union, sometimes with treaties like the Fiscal Compact, it is far from clear that Brexit and the possible demise of the union, if the fever spreads to France, Germany and other countries with their populations demanding their own referenda, will lead to the abandonment of neoliberal policies. Aust…

A brief note on Venezuela and the turn to the right in Latin America

So besides the coup in Brazil (which was all but confirmed by the last revelations, if you had any doubts), and the electoral victory of Macri in Argentina, the crisis in Venezuela is reaching a critical level, and it would not be surprising if the Maduro administration is recalled, even though right now the referendum is not scheduled yet.

The economy in Venezuela has collapsed (GDP has fallen by about 14% or so in the last two years), inflation has accelerated (to three digit levels; 450% or so according to the IMF), there are shortages of essential goods, recurrent energy blackouts, and all of these aggravated by persistent violence. Contrary to what the press suggests, these events are not new or specific to left of center governments. Similar events occurred in the late 1980s, in the infamous Caracazo, when the fall in oil prices caused an external crisis, inflation, and food shortages, which eventually, after the announcement of a neoliberal economic package that included the i…

What is the 'Classical Dichotomy'?