Wednesday, January 14, 2015

Voodoo Economics: Paul Krugman Rejected By His Peers

Paul Krugman has become an embarrassment to the economics profession. Despite his Nobel Prize and despite his previous high regard in the profession, his twice-a-week editorials in The New York Times are causing even progressive economists to treat him as somewhat of a kook.
Since 2011, the United States has followed what Krugman correctly calls a policy of “austerity.” For example, the federal budget deficit has declined from 8.4% of GDP in 2011 to a predicted 2.9% of GDP for all of 2014. All along the way Paul Krugman protested that such policies would prolong the recession and even push us into a “low-grade depression.”
In fact the opposite occurred. As Jeffrey Sachs wrote the other day:
“… rather than a new recession, or an ongoing depression, the US unemployment rate has fallen from 8.6% in November 2011 to 5.8% in November 2014. Real economic growth in 2011 stood at 1.6%, and the IMF expects it to be 2.2% for 2014 as a whole… [It is likely] that aggregate growth for all of 2015 will be above 3%.”

 http://www.forbes.com/sites/johngoodman/2015/01/13/voodoo-economics-paul-krugman-rejected-by-his-peers/

No comments: