News: Registration requires "verification" before you are allowed to post.  Be sure to check your "spam" folder to make sure that you receive the verification link.  The e-mail should come from "Onnidan Fan Forum" with the return address -> staff@onnidan.com.


Author Topic: In-depth look at the economics behind the debate on debt and spending  (Read 232 times)

Offline Bison66

  • Assistant GM
  • *****
  • Posts: 22,527
  • Adinkra Symbol for "Unbreakable" "Resilient"
    • View Profile
Quote
A source frequently cited by the Republicans in the fiscal consolidation debate is Carmen Reinhart and Kenneth Rogoff’s This Time Is Different: Eight Centuries of Financial Folly (Princeton University Press, 2009), which presents research showing that countries with national debt exceeding 90% of GDP have growth rates averaging 1.3ppt lower than economies with less debt.

That finding was based on a study of financial crises over the past 800 years, but—as Paul Krugman has noted—the causality is not necessarily one-way.

There are cases in which growth rates have fallen because of large fiscal deficits, but there are also instances in which fiscal deficits have increased because growth has slowed. In the former cases, excessive government deficits crowded out private investment and depressed growth rates, while in the latter, governments administered fiscal stimulus to prevent further declines in the growth rate as the private sector paid down debt during a balance sheet recession.

On the surface, the two patterns appear similar since they are both characterized by large deficits and low growth rates. What sets them apart is yields on government debt, which are high in the first case and low in the second.

The three countries in which the most clamor has arisen over fiscal deficits—Japan, the US, and the UK—are all characterized by record low yields on government debt, and their private sectors are engaged in deleveraging on a massive scale.

The conclusion we should draw from this is that all three economies are in a balance sheet recession and that fiscal deficits should be used to prevent growth rates from falling any further.

http://www.businessinsider.com/reinhart-and-rogoff-dangerous-debt-ceiling-2011-8
O0
Long Live Killmonger!

Offline iceman4221

  • Assistant GM
  • *****
  • Posts: 2,725
    • View Profile
    • The Beast of the MidEast with 16 Football Championships and Counting...
Re: In-depth look at the economics behind the debate on debt and spending
« Reply #1 on: August 07, 2011, 01:28:26 PM »
Quote
A source frequently cited by the Republicans in the fiscal consolidation debate is Carmen Reinhart and Kenneth Rogoff’s This Time Is Different: Eight Centuries of Financial Folly (Princeton University Press, 2009), which presents research showing that countries with national debt exceeding 90% of GDP have growth rates averaging 1.3ppt lower than economies with less debt.

That finding was based on a study of financial crises over the past 800 years, but—as Paul Krugman has noted—the causality is not necessarily one-way.

There are cases in which growth rates have fallen because of large fiscal deficits, but there are also instances in which fiscal deficits have increased because growth has slowed. In the former cases, excessive government deficits crowded out private investment and depressed growth rates, while in the latter, governments administered fiscal stimulus to prevent further declines in the growth rate as the private sector paid down debt during a balance sheet recession.

On the surface, the two patterns appear similar since they are both characterized by large deficits and low growth rates. What sets them apart is yields on government debt, which are high in the first case and low in the second.

The three countries in which the most clamor has arisen over fiscal deficits—Japan, the US, and the UK—are all characterized by record low yields on government debt, and their private sectors are engaged in deleveraging on a massive scale.

The conclusion we should draw from this is that all three economies are in a balance sheet recession and that fiscal deficits should be used to prevent growth rates from falling any further.

http://www.businessinsider.com/reinhart-and-rogoff-dangerous-debt-ceiling-2011-8
O0

Great Article - thanks for posting... 
Quote
NEVER Deliberate, Debate or Argue About what is Clearly Wrong and/or Unjust, and Try to Persuade Yourself or Others  that it's Not...

Offline Cats4ever

  • Assistant GM
  • *****
  • Posts: 11,640
  • General Manager
    • View Profile
    • FVSU: Let's build a winner.
Re: In-depth look at the economics behind the debate on debt and spending
« Reply #2 on: August 07, 2011, 01:41:51 PM »
Quote
A source frequently cited by the Republicans in the fiscal consolidation debate is Carmen Reinhart and Kenneth Rogoff’s This Time Is Different: Eight Centuries of Financial Folly (Princeton University Press, 2009), which presents research showing that countries with national debt exceeding 90% of GDP have growth rates averaging 1.3ppt lower than economies with less debt.

That finding was based on a study of financial crises over the past 800 years, but—as Paul Krugman has noted—the causality is not necessarily one-way.

There are cases in which growth rates have fallen because of large fiscal deficits, but there are also instances in which fiscal deficits have increased because growth has slowed. In the former cases, excessive government deficits crowded out private investment and depressed growth rates, while in the latter, governments administered fiscal stimulus to prevent further declines in the growth rate as the private sector paid down debt during a balance sheet recession.

On the surface, the two patterns appear similar since they are both characterized by large deficits and low growth rates. What sets them apart is yields on government debt, which are high in the first case and low in the second.

The three countries in which the most clamor has arisen over fiscal deficits—Japan, the US, and the UK—are all characterized by record low yields on government debt, and their private sectors are engaged in deleveraging on a massive scale.

The conclusion we should draw from this is that all three economies are in a balance sheet recession and that fiscal deficits should be used to prevent growth rates from falling any further.

http://www.businessinsider.com/reinhart-and-rogoff-dangerous-debt-ceiling-2011-8
O0
Say What? :o
Have OS read this? ;D This only shows the gov't can not be ran like everyone's household.
Your treatment of others give them control of your soul
Matthew 5:25-26

 

 

Support Our Efforts

Support our efforts

With all the divisive rhetoric on social media outlets like Facebook and Twitter, websites such as ours, especially message boards, are under the watchful eye of the Internet giants. And those giants are coming down hard on sites like this one due to the perception of the need for better "oversight".

We recognize the cultural conflict that exists and over the past few months we've been accused of allowing content in posts/threads that supposedly violates some advertiser's policies. Those threads weren’t an issue in the past, but for some reason, they are an issue now. And we are being penalized (financially) because of it.

 

As a result we are coming to you directly for your financial support>

 

Please consider supporting our efforts to foster free and open discussion of current issues as they relate to the topics you are interested in. You can use the Cash App and contribute to $onnidan, or process your donation through PayPal below.

=OW= 


 

Onnidan's HBCUSports Logo
News

 

 

Powered by EzPortal