Stanford economist John Taylor reports that the G20 appears to be abandoning specific fiscal and monetary goals:
A participant in last Friday’s G20 meetings told me that the error was a factor in the decision to omit specific deficit or debt-to-GDP targets in the G20 communique.
The error refers to Reinhart and Rogoff’s leaving out data that would have shown high debt-to-GDP levels actually don’t produce that great an impact on growth.
Taylor argues the error does not affect the over all lesson of Reinhart and Rogoff — that large debt loads are bad, but still, this is hard evidence that the austerity movement is crumbling.
Earlier we talked about how Bill Gross was a critic of austerity now, and so are others in Europe.
While the influence of Reinhart and Rogoff on the initial push for austerity may be overrated, the destruction of this study is clearly having an impact.
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