Much Dumber Than Dirt
The BBC has a nice little article on the screw-up that was used to justify austerity/deficit hysteria: Reinhart, Rogoff… and Herndon: The student who caught out the profs.
Read how a grad student at UMass-Amherst [University of Massachusetts at Amherst] discovered the problems quickly but spent a lot of time reviewing what he found because he couldn’t believe that two economics professors at Harvard University could be so sloppy.
But it gets worse. At Next New Deal Arindrajit Dube, a UMass-Amherst economics professor, did some additional work on the R-R data and wrote Reinhart/Rogoff and Growth in a Time Before Debt.
It is a very technical post, but the bottom line is that debt doesn’t seem to cause the lower growth, lower growth appears to raise the debt. Basically, the cause has to precede the effect, and Reinhart/Rogoff’s data shows that the lower grow starts before the rising debt, not after.
