Reinhart-Rogoff, Austerity Superduo, Even More Full Of B.S. Than Previously Thought
Just in case you are unfamiliar with Reinhart-Rogoff: they are a pair of economists who published a very famous paper purporting to show that high public debt to GDP ratio leads to negative economic growth. This paper was waved around by people like Paul Ryan, who used it to argue that cutting Social Security and Medicaid and unemployment were important tools for staving off recession because of the magical thing that happens to economies when the GDP to debt ratio hits 90%.
Will you be shocked to learn that Reinhart-Rogoff's famous paper was wrong? As a graduate student from UMass demonstrated, Reinhart and Rogoff not only based their conclusions off cherry-picked data, they made a serious error in the Excel spreadsheet they were working with. (Math is really hard, you guys.)
But wait! There's more! Not only were Reinhart-Rogoff working with a cherry-picked data set and a thoroughly screwed up spreadsheet, they fell victim to one of the most classic blunders and got the causal relationship backwards: slow growth causes higher debt, not the other way around. D'OH, and cetera.
As you can see from the chart from [University of Massachusetts professor Arindrajit] Dube's paper below, growth tends to be slower in the five years before countries have high debt levels. In the five years after they have high debt levels, there is no noticeable difference in growth at all, certainly not at the 90 percent debt-to-GDP level that Reinhart and Rogoff's 2010 paper made infamous. [University of Michigan economics professor Miles Kimball and University of Michigan undergraduate student Yichuan Wang] present similar findings in [a] Quartz piece:
No big deal, it's just the total opposite of what Reinhart-Rogoff has been saying, and also, the total opposite of the economic policy we're currently pursuing, that's all! Did we also mention that Reinhart-Rogoff are from Harvard and are therefore supposed to be the "best and brightest" economists out there? Conclusion: if they are the best and the brightest, we are interested in what stupid economists are like.