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There's no need for all this economic sadomasochism

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  • Graeber, David

Abstract

The intellectual justification for austerity lies in ruins. It turns out that Harvard economists Carmen Reinhart and Ken Rogoff, who originally framed the argument that too high a "debt-to-GDP ratio" will always, necessarily, lead to economic contraction – and who had aggressively promoted it during Rogoff's tenure as chief economist for the IMF –, had based their entire argument on a spreadsheet error. The premise behind the cuts turns out to be faulty. There is now no definite proof that high levels of debt necessarily lead to recession.

Suggested Citation

  • Graeber, David, 2013. "There's no need for all this economic sadomasochism," LSE Research Online Documents on Economics 53247, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:53247
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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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