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Wednesday, October 17, 2012

'We Have to Take Issue with Gross Misinterpretations of the Facts'

Via Calculated Risk:

An update from economists Carmen Reinhart and Kenneth Rogoff at Bloomberg: Sorry, U.S. Recoveries Really Aren’t Different

Five years after the onset of the 2007 subprime financial crisis, U.S. gross domestic product per capita remains below its initial level. Unemployment, though down from its peak, is still about 8 percent. Rather than the V- shaped recovery that is typical of most postwar recessions, this one has exhibited slow and halting growth.

This disappointing performance shouldn’t be surprising. We have presented evidence that recessions associated with systemic banking crises tend to be deep and protracted...
...
Recently, however, a few op-ed writers have argued that, in fact, the U.S. is “different” and that international comparisons aren’t relevant because of profound institutional differences from one country to another. ... We well appreciate that during elections, academic economists sometimes become advocates. It is entirely reasonable for a scholar, in that role, to try to argue that a candidate has a better economic program that will benefit the country in the future. But when it comes to assessing U.S. financial history, the license for advocacy becomes more limited, and we have to take issue with gross misinterpretations of the facts.

Ouch!

And their conclusion:

The most recent U.S. crisis appears to fit the more general pattern of a recovery from severe financial crisis... Indeed, if one compares U.S. output per capita and employment performance with those of other countries that suffered systemic financial crises in 2007-08, the U.S. performance is better than average.

[See here too.]

    Posted by on Wednesday, October 17, 2012 at 12:24 AM in Economics, Politics | Permalink  Comments (70)


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