Thursday, 18 April 2013
Rogoff: it’s not just empirical research he can’t do.
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.”