A Study That Set the Tone for Austerity Is Challenged

thenews 2013.04.17 07:17

In recent years, policy makers in Europe and the United States have fastened on the notion that reaching a certain heavy burden of debt would threaten future economic health — often to justify austerity budgets that increased unemployment and sapped economic strength in the here and now.

But now some economists are challenging the very foundations of that idea, raising questions about whether such a debt threshold even exists and setting off a fierce debate that flared up on Tuesday across the Internet about whether potentially flawed research is at least partly responsible for the slow growth that has bedeviled most advanced industrial countries since the recovery from the financial crisis began in 2009.

The debate comes at a particularly perilous time, as economic officials from the United States and other countries gather for the annual spring meeting of the World Bank and International Monetary Fund in Washington, where many are expected to urge high-debt Europe to ease up on its commitment to austerity in the face of rising unemployment and new economic contractions.