tag:blogger.com,1999:blog-4900303239154048192.post8200184564188557247..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: Reinhart and Rogoff: There’s No There ThereUnknownnoreply@blogger.comBlogger6125tag:blogger.com,1999:blog-4900303239154048192.post-8092260671333524472010-08-19T10:42:45.901-04:002010-08-19T10:42:45.901-04:00I agree that the paper is useless, but I disagree ...I agree that the paper is useless, but I disagree on the reasons.<br /><br />I pointed out two problems with the paper some time ago: <br /><br />http://www.asymptosis.com/deficits-dont-matter-the-supposed-experts-speak.html<br /><br />1. Sample size. Their main exhibit shows the U.S.:<br /><br />http://www.asymptosis.com/wp-content/uploads/2010/03/Screen-shot-2010-03-02-at-9.19.03-AM.png<br /><br />But as they point out in a footnote, they have only *five* sample points >90% (I find six), samples that represent a profoundly anomalous economic period:<br /><br /> U.S. Federal Debt as a Percentage of GDP<br />1944 91.45<br />1945 116.00<br />1946 121.25<br />1947 105.81<br />1948 93.75<br />1949 94.60<br /><br />Krugman, looking at the full data set, finds equally problematic sampling shortage worldwide.<br /><br />2. They compare debt in a given year to inflation in the same year, making no attempt to suss out long-term effects (which are what matter). <br /><br />3. They don't make the most widely-accepted of necessary corrections–”convergence” or the “catch-up effect”–the tendency of less-prosperous economies to catch up with their cohorts due to transfers of technology, expertise, trade, capital, etc.<br /><br />Correlational analysis is inherently problematic, but expecting every correlational analysis to provide a truly convincing causation analysis is unrealistic.Steve Rothhttps://www.blogger.com/profile/11895481216028771016noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-72857767848388493292010-08-13T19:23:24.355-04:002010-08-13T19:23:24.355-04:00The proper balanced budget amendment to the Consti...The proper balanced budget amendment to the Constitution would simply say that the government cannot borrow. So if government overspends then government will have to print the money. As this will cause inflation, then it becomes clear that government must tax appropriately to remove most of its spending from the economy. That is all.TheTruckerhttps://www.blogger.com/profile/10346127768102862741noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-16333958761081009182010-08-13T18:52:03.927-04:002010-08-13T18:52:03.927-04:00But, Salient, we do not allow debt to accrue irres...But, Salient, we do not <i>allow</i> debt to accrue irresponsibly. It is our <b>policy</b> to remove money from circulation while encouraging the use of credit; and it is our <b>policy</b> to accumulate debt and "manage" it.<br /><br />The unthinkable level of debt in our economy today is not the result of accident or irresponsibility. It is by design of policy. The debt itself, I think, is an unintended consequence of our efforts to fight inflation while encouraging growth.<br /><br />Anyway, <i>public</i> debt is the least of our debt problems.<br /><br />The ArthurianThe Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-38297237914501447022010-08-12T20:31:08.014-04:002010-08-12T20:31:08.014-04:00I disagree with this. The reason is that no econom...I disagree with this. The reason is that no economic crisis has ever pushed debt levels in a country to beyond 90% of GDP without that country first allowing debt to accrue irresponsibly during economic expansions.<br /><br />Take the US. About one-third of current public debt is due to the financial crisis while the other two-thirds is due to Reagan and Bush 2. Had the US been fiscally responsible since 1981 and had zero public debt going into this crisis, debt levels would only be about 20% of GDP and no one would be concerned 90% debt levels.<br /><br />Similarly Japan had public debt of around 48% of GDP in 1991 at the beginning of the "lost decade".Neil Cameron (One Salient Oversight)https://www.blogger.com/profile/03143948543305522865noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-62103645894383938282010-08-12T10:34:58.044-04:002010-08-12T10:34:58.044-04:00Good post. You might also be interested in the pap...Good post. You might also be interested in the paper by Randy Wray and Yeva Nersisyan, which goes into significant detail to debunk R/R. Here's the link: http://www.levyinstitute.org/pubs/wp_603.pdf (forgot the link last time, which is why I deleted that post)STFhttps://www.blogger.com/profile/16261666934714196464noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-49468367117435196962010-08-12T10:33:07.464-04:002010-08-12T10:33:07.464-04:00This comment has been removed by the author.STFhttps://www.blogger.com/profile/16261666934714196464noreply@blogger.com