Having a public spat with your colleagues and former classmates over the best way to fix the global economy can be “very unpleasant,” according to Paul Krugman.
The Nobel Prize-winning economist and New York Times columnist told Fareed Zakaria that “the stakes are high” in his public debate with Carmen Reinhart and Ken Rogoff, over their research which found a close correlation between high levels of public debt and slow economic growth. Researchers recently debunked the two economists’ findings, which were widely cited by pro-austerity politicians to justify cutting governments spending.
In the aftermath, Krugman has been critical both of the politicians who used Reinhart and Rogoff’s research to push for austerity and of the economists themselves for not doing more to admit that their ultimate conclusion was wrong. The two posted a letter last month accusing Krugman of engaging in “uncivil behavior” in his criticisms.
“This one claimed result -- which is that growth falls off a cliff when debt is at 90 percent of GDP -- that’s what the world picked up on and that result is false,” Krugman told Zakaria on an episode of his show “Fareed Zakaria GPS,” which aired on CNN Sunday. “That paper of theirs did a lot of damage by giving people who didn’t want stimulus, who didn’t want any kind of expansionary policy a way to scare their opponents.”
Indeed politicians’ rush to impose government belt-tightening in an aim to improve growth has had unfortunate consequences, especially in Europe. The eurozone unemployment rate rose to a record high 12.2 percent in April, thanks in part to the region’s drastic austerity measures.
And in the U.S., policymakers’ decision to slash government spending held back economic growth last quarter, according to Reuters.
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