Salient to Investors:
Paul Krugman writes:
Keynesian economics is close to a TKO over austerian economics, whose predictions about the real world failed completely and supporting academic research has turned out to be riddled with flaws.
The two main studies supporting austerity – Alesina/Ardagna and Reinhart/Rogoff – were criticised almost as soon as they came out and did not hold up under scrutiny. The IMF reworked Alesina/Ardagna with better data and reversed their findings, and Reinhart/Rogoff suffered the famous Excel error.
The dominance of austerians in influential circles is due in part to the widespread desire to see economics as a morality play, a tale of excess and its consequences, despite the fact that the people suffering now are not at all the same people who sinned during the bubble years. In part due to upper-class preferences.
Page, Bartels and Seawright found that the policy preferences of ordinary Americans differ significantly from the very wealthy. Joe Public is somewhat worried about budget deficits and wants entitlement spending to rise, but the wealthy regard deficits as the most important problem and want to cut entitlement spending.
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