In recent years, the “growth vs. austerity” debate has been raging in academic and policy circles. In recent weeks the growth crowd have been claiming victory, citing:
- Research showing Carmen Reinhart and Kenneth Rogoff’s seminal work on debt-to-GDP levels contained numerous errors and was not so conclusive as originally believed. (Related: Did Harvard Economists Make an Excel Error that Led to Economic Austerity?)
- The European Commission granting Spain, Portugal, Greece, Italy and France, among other nations, greater leniency on planned adoption of budget cuts and other austerity measures.
- PIMCO’s Bill Gross told The Financial Times: “The UK and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not. You’ve got to spend money.”
As a former advisor to Ronald Reagan and diehard supply-sider, Larry Kudlow is no Keynesian. “I am for government austerity” and believe “a smaller government withRead More »from Larry Kudlow: Bernanke Was Right and I Was Wrong About Inflation