• About Us
      Asia’s 1 st LEED Platinum Rated Campus

      Asia’s 1st LEED Platinum Rated Campus

      About Us

      • Chairman's Message
      • Vice Chairman & CEO
      • Dean's Message
      • Governing Council
      • Business Advisory Council
      • Academic Advisory Council
      • Work With Us
      • Mandatory Disclosure
      • Anti-Ragging Notice

      TERM ZERO

      Media

      • News
      • Events
      • In Media
      • Media Kit

      Rankings

      Accreditations

      NIRF

      Campus

      Blog

      Annual Events

      • Convocation
      • TEDxGLIMChennai
      • L'Attitude
      • Digital Symposium
      • Sangamitra
      • Annual Alumni Meet
      • SWIM
      • IEC
      • Human Capital Management
  • Programs
      Transform and Lead

      Transform and Lead

      Full Time Programs

      PGPM

      One Year MBA for professionals with work experience

      Learn More Apply Now

      PGDM

      Two Year MBA for professionals with 0-2 years of work experience

      Learn More Apply Now

      EXECUTIVE EDUCATION

      Partner with us for customized learning solutions for your organisation

      Learn More

      Corporate Programs

      PGXPM

      Executive program for Mid & Senior Level working professionals

      Learn More Apply Now APP. Deadline: 30th August, 2020

      PGPM Flex

      Weekend management program for young working professionals

      Learn More Apply Now APP. Deadline: 30th August, 2020

      MBA in Business Analytics

      Family Enterprises Management

  • Faculty & Research
      Ranked 6th

      Ranked 6 th

      by NIRF ranking in teaching and learning among all B-Schools in the country

      Faculty

      • Full Time Faculty
      • Visiting Faculty
      • Adjunct Faculty

      Research

      • Faculty Editors
      • Papers & Journal Publications
      • Case Studies & Books
      • Conference Proceedings

      Centers of Excellence

      • Centre For Excellence in Retail Management
      • Great Lakes Centre For Management Research
      • Kotler - Srinivasan Centre for Research in Marketing
      • Centre for Excellence in Business Analytics and Business Intelligence
      • CET
      • Union Bank Centre for Banking Excellence

      Conferences

      • NASMEI
      • Financial Conference
  • Recruiters & Companies

      “Great Location for Talent. We are happy to continue visiting and having budding professionals join us and grow their careers.”

      Anil Visal

      Partner - Deloitte India

      Campus Recruitment

      • Recruitment Process
      • PGDM Class Profile 2018-20
      • PGPM Class Profile 2019-20
      • Past Recuiters
      • Student Achievements
      • Recruiters Speak

      Internships

      • Recruitment Process
      • PGDM Class Profile 2019-21
      • Live Projects

      Placement Reports

      • PGPM
      • PGDM
      • Internship Report

      Leadership Series

      • Titans Speak
      • Industry Lecture Series
      • Thought Leader Series

      Talent Listings

  • Alumni

Austerity measures: Research Findings and their validity

December 11, 2013 | Posted by bobbysrinivasan << back to blog

A recent study was made by two eminent Harvard University economists. Carmen Reinhart and Kenneth Ragott regarding the relationship between budget debt and future economic growth. Their 2012 study concluded that economic growth in a country is likely to stagnate once the rates of a government’s debt exceeded a threshold 90 percent. Later it was found that the professors accidently omitted some relevant data in reaching this result. Questions were also raised with respect to how they weighted observations and which data they used.
Many countries have taken the results of the study seriously and introduced strong austerity measures. These countries strongly believed that they must bring down the government budget deficits as quickly as possible. There is however some academicians who challenged the conclusion by calling in the usefulness of such statistical research with incomplete data set. Some researcher took pains to revisit the data, methodology and analysis to check as to whether there is universal validity in their conclusion.
Henceforth no important policy conclusion should be based on a single statistical result. Policy judgment should be made only after enough evidence is found by repeated experiments (replication) and with different sets of data drawn from different countries. One of the recent experiences in the US is the decline in the value of house prices. Earlier studies before the sub-prime crisis always concluded that real estate prices will continue to go up and investing in a house is a definite hedge against inflation. The sub-prime problem of 2008 destroyed this myth. Trillions of dollars disappeared from the real estate value and the personal net worth of Americans dropped significantly.
Finally, the question of austerity measures even though relevant, because nobody should spend the money that they don’t have, should be viewed with a great deal of caution. The current Euro zone countries policies of austerity measures have caused enormous hardship to the lives of their citizens especially in Greece and Spain.

<< back to blog

Programs

PGPM - One Year MBA for professionals with 2+ years work experience

Learn More >

PGDM - Two Year MBA for graduates with 0-2 years work experience

Learn More >

Events

Union Bank Finance Conference
Dec 17, 2020

Networking with Champions
Nov 08, 2020

Harry Kraemer on Performance with A Purpose
Oct 08, 2020
Read more

Successful Women in Management (SWIM) Lecture Series
July 05, 2020
Read more

The Great Circle Alumni Talk Series
July 04, 2020
Read more

  • About Us
  • Programs
  • Faculty & Research
  • Recruiters & Companies
  • Alumni
  • Blog
  • Contact Us