Money and Finance
- The Financial Sense Newshour Interviews Kyle Bass
Found via Zero Hedge. Kyle: When you think about what Reinhart and Rogoff’s book says, it kind of gets to an answer but it’s not the right way to look at things; there are many more variables to analyze the situation with. One is, of course, debt...
- John Mauldin: Austerity Is A Consequence, Not A Punishment
Two seemingly different questions and comments from readers and friends crossed my path the last few days, but I saw a definite connection between them. The first question was, Why do we pursue austerity when it seems not to work? And then many readers...
- Debt And Growth Revisited
Found via Simoleon Sense. With the advanced economies at a critical juncture, some economists are urging more fiscal stimulus while others argue that raising debt levels will stunt growth. This column presents the Reinhart-Rogoff findings on the relationship...
- They Did Their Homework (800 Years Of It)
Found via Simoleon Sense. THE advertisement warns of speculative financial bubbles. It mocks a group of gullible Frenchmen seduced into a silly, 18th-century investment scheme, noting that the modern shareholder, armed with superior information, can avoid...
- Hussman Weekly Market Comment: We're Speaking Japanese Without Knowing It
If one seeks analysis about the recent financial crisis, and what most probably lies ahead, it would be wise to place particular weight on the views of economists who saw it coming (and ideally those who provided careful analysis rather than hyperbole)....
Money and Finance
Reinhart-Rogoff recrunch the numbers
Carmen Reinhart and Ken Rogoff have had a bad day. The two economic historians’ research, which implied that public debt overhangs can hamper economic growth, was perhaps one of the most cited pieces of work in recent years. Their advice that high debt-GDP ratios – particularly above 90 per cent – are harmful to growth, has become a widely used point in discussion. And it’s under attack by a trio at the University of Massachusetts, Amherst – Thomas Herndon, Michael Ash, and Robert Pollin.
As FT Alphaville has noted, the issue is about one of Reinhart and Rogoff’s most heavily cited papers on the importance of debt. This paper has been accused of being the victim of fat-fingered Excel coding, as well as selective use of data and odd weighting of how different episodes are weighted, which seemed – to the authors – to make little sense. [UPDATE, 14:46 GMT - Pollin and Ash have written a piece for the FT on what they think this all means for austerity here.]
Robin Harding posted Reinhart and Rogoff’s original reply here. Overnight, the authors have worked through the numbers – and have put up a pretty robust defence of their work. They do admit the first error – there was an Excel blunder:
- The Financial Sense Newshour Interviews Kyle Bass
Found via Zero Hedge. Kyle: When you think about what Reinhart and Rogoff’s book says, it kind of gets to an answer but it’s not the right way to look at things; there are many more variables to analyze the situation with. One is, of course, debt...
- John Mauldin: Austerity Is A Consequence, Not A Punishment
Two seemingly different questions and comments from readers and friends crossed my path the last few days, but I saw a definite connection between them. The first question was, Why do we pursue austerity when it seems not to work? And then many readers...
- Debt And Growth Revisited
Found via Simoleon Sense. With the advanced economies at a critical juncture, some economists are urging more fiscal stimulus while others argue that raising debt levels will stunt growth. This column presents the Reinhart-Rogoff findings on the relationship...
- They Did Their Homework (800 Years Of It)
Found via Simoleon Sense. THE advertisement warns of speculative financial bubbles. It mocks a group of gullible Frenchmen seduced into a silly, 18th-century investment scheme, noting that the modern shareholder, armed with superior information, can avoid...
- Hussman Weekly Market Comment: We're Speaking Japanese Without Knowing It
If one seeks analysis about the recent financial crisis, and what most probably lies ahead, it would be wise to place particular weight on the views of economists who saw it coming (and ideally those who provided careful analysis rather than hyperbole)....