CPPA faculty member Michael Ash is co-author of a new report that highlights serious flaws in a 2010 study that’s being used to justify various austerity policies in this country and abroad.
The 2010 study, by Carmen Reinhart and Kenneth Rogoff of Harvard University, presented evidence showing a negative relationship between debt and growth rates for countries carrying high debt loads–that is, the authors argued that countries with debt-to-G.D.P. ratios of more than 90% on average experience falling growth rates.
The Reinhart and Rogoff study has been used by many policymakers, including in the U.S., to call for major budget cuts as a strategy for reducing national debt and getting economies back on track following the most recent recession.
But in trying to replicate the Reinhart-Rogoff results, Ash and his UMass Amherst colleagues Thomas Herndon and Bob Pollin found math errors and data omissions that challenge the conclusions of the 2010 study. Indeed, according to Herndon, Ash and Pollin, their analysis shows that “the average real G.D.P. growth rate for countries carrying a public debt-to-G.D.P. ratio of over 90 percent is actually 2.2 percent, not -.1 percent,” as reported by Reinhart and Rogoff.
This new analysis challenges international austerity measures that may, in fact, have contributed to the slow economic recovery and kept many people in the ranks of the unemployed.
The Herndon, Ash and Pollin study has received national and international attention in the media, including the Washington Post, Reuters, the Guardian, and Salon.
The new study is available through the UMass Political Economy Research Institute.