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The Excel Depression - Krugman's article re Rogoff and Reinhadt's Excel-lent 'Adventure'
http://www.nytimes.com/2013/04/19/opinion/krugman-the-excel-depression.html?ref=paulkrugman&_r=1&At the beginning of 2010, two Harvard economists, Carmen Reinhart and Kenneth Rogoff, circulated a paper, “Growth in a Time of Debt,” that purported to identify a critical “threshold,” a tipping point, for government indebtedness. Once debt exceeds 90 percent of gross domestic product, they claimed, economic growth drops off sharply.
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... Reinhart-Rogoff quickly achieved almost sacred status among self-proclaimed guardians of fiscal responsibility; their tipping-point claim was treated not as a disputed hypothesis but as unquestioned fact. For example, a Washington Post editorial earlier this year warned against any relaxation on the deficit front, because we are “dangerously near the 90 percent mark that economists regard as a threat to sustainable economic growth.” Notice the phrasing: “economists,” not “some economists,” let alone “some economists, vigorously disputed by other economists with equally good credentials,” which was the reality.
For the truth is that Reinhart-Rogoff faced substantial criticism from the start, and the controversy grew over time. As soon as the paper was released, many economists pointed out that a negative correlation between debt and economic performance need not mean that high debt causes low growth. It could just as easily be the other way around, with poor economic performance leading to high debt. Indeed, that’s obviously the case for Japan, which went deep into debt only after its growth collapsed in the early 1990s.
Over time, another problem emerged: Other researchers, using seemingly comparable data on debt and growth, couldn’t replicate the Reinhart-Rogoff results. They typically found some correlation between high debt and slow growth — but nothing that looked like a tipping point at 90 percent or, indeed, any particular level of debt.
Finally, Ms. Reinhart and Mr. Rogoff allowed researchers at the University of Massachusetts to look at their original spreadsheet — and the mystery of the irreproducible results was solved. First, they omitted some data; second, they used unusual and highly questionable statistical procedures; and finally, yes, they made an Excel coding error. Correct these oddities and errors, and you get what other researchers have found: some correlation between high debt and slow growth, with no indication of which is causing which, but no sign at all of that 90 percent “threshold.”
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Once again, right wing dogma is shown to be pure putrid bullshit. Data inadvertantly left out, a mistake in enterring a formula in an Excel spreadsheet? Uh-huh, and Kim Kardashian doesn't have rugburns on her butt! What's interesting and telling, is that Rogoff and Reinhart took almost three years to allow actual researchers a look at their work. This too was just a coincidence, RIIIGHHHT!
Right wing theology is, as it always has been, based on circuitous, fraudulent arguments. There are no better masters of the dark arts of casuistry than the Right Wing bullshitters (some of whom masquerade as economists).
... from this day forward any argument referred to as a "Reinhart and Rogoff" will be understood to be a fraudulent scam.
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