Valentina Pop, EUObserver, January 7, 2013
The International Monetary Fund's (IMF) top economists Olivier Blanchard and Daniel Leigh have drafted a special working paper on their own previous "errors" in predicting the impact of austerity on European economies.
"Forecasters significantly underestimated the increase in unemployment and the decline in domestic demand associated with fiscal consolidation," the paper, out last week, says.
After having briefly mentioned the problem in October in the IMF's global economic outlook, Blanchard and Leigh explain more extensively, complete with mathematical formulas, how forecasters got it wrong when assessing the impact of sharp spending cuts in places like Greece, Portugal and Spain.
IMF economists admit 'errors' on austerity policy