Sentences to ponder (the IMF on fiscal policy and multipliers)

For the countries where the full data is available on the IMF website, the results lose statistical significance if Greece and Germany are excluded.

Moreover, the IMF results are presented as general but are limited to the specific time period chosen. The 2010 forecasts of deficits are not good predictors of errors in growth forecasts for 2010 or 2011 when the years are analysed individually. Its 2011 forecasts are not good predictors of anything.

Economists contacted by the FT worried about the robustness of the techniques used. Jonathan Portes, director of the UK’s National Institute of Economic and Social Research, worried that cross-country studies with small samples never prove anything, even though he strongly believes multipliers are large.

I suspect that FT blog post is not one which will be shouted by many from the rooftops.  Multiple hat tips are expressed here.


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