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Is the U.S. on an unsustainable path?
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Is the U.S. on an unsustainable path?

Lessons from the past as detailed by Reinhart and Rogoff

25 Seiten · 3,90 EUR
(28. Dezember 2011)

Ich bin mit den AGB, insbesondere Punkt 10 (ausschließlich private Nutzung, keine Weitergabe an Dritte), einverstanden und erkenne an, dass meine Bestellung nicht widerrufen werden kann.

From the introduction:

Randall Wray and Neva Nersisyan develop a similar argument. They also observe that most economists accept the desirability of expansion of deficits over the short term, but fear possible long-term effects. Many believe that generous 'entitlements' will have to be scaled back to put in place 'sustainable' budgets. Wray and Nersisyan therefore ask the question of whether there is a limit to how high public debt can go before the government has to default. While theory certainly cannot provide a definitive answer, a recent monumental study by Carmen Reinhart and Kenneth Rogoff provides empirical evidence. They find that up to a threshold for the debt-to-GDP ratio of 90 per cent, the relation between government debt and economic growth is weak, but beyond that threshold growth suffers. Wray and Nersisyan present their theoretical misgivings about the Reinhart and Rogoff approach and they also discuss its relevance for the case of Greece and the Eurozone more generally. In the end, the authors conclude that the Reinhart-Rogoff classification exposes their misunderstanding of what government debt is. As a matter of principle, in the case of sovereign government debt, the government always has the wherewithal to make all payments as they come due ? without demanding higher taxes from residents and without generating a trade surplus. In fact, although the Reinhart and Rogoff book claims to have exposed 70 cases of domestic default, Wray and Nersisyan report that they cannot find a single case when a country that issues its own currency and does not peg it to another currency or metal defaulted on its debt.

zitierfähiger Aufsatz aus ...
Stabilising an unequal economy?
Torsten Niechoj, Özlem Onaran, Engelbert Stockhammer, Achim Truger, Till van Treeck (eds.):
Stabilising an unequal economy?
the authors
Prof. Dr. Randall Wray
Randall Wray

Professor of Economics and Research Director of the Center for Full Employment and Price Stability at the University of Missouri-Kansas City, USA.

[weitere Titel]
Yeva Nersisyan
Yeva Nersisyan

University of Missouri-Kansas City, USA