Thursday, 18 April 2013

Rogoff: it’s not just empirical research he can’t do.

He has no grasp of economic theory either. See here, here, here and here.
In particular he doesn’t get the distinction between micro entities that are in debt and macro entities that re in debt. When a micro entity (like a household) has a deficit or debt problem, it  must cut its spending or increase its income. Macro entities - governments in particular - are entirely different
In fact it could well be that failure that motivated him to do his flawed empirical research. I.e. the motive was probably along the lines of: “government is like a household in that it has to cut its spending when in debt, so I’ll find some empirical evidence to back that idea.”

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