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, thats 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, couldnt 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.
Manifestor_of_Light
(21,046 posts)Excellent.
1StrongBlackMan
(31,849 posts)question (brought to mind by tonight's Lawrence O'Donnell's Last Word):
Paul, if this report was the definitive argument stifling the anti-austerity argument hat you promote, why didn't YOU find the computational error? Was it because they wouldn't give you their numbers? That would have opened them up to a serious professional blast ... since no non-peered reviewed study is taken seriously.
CTyankee
(63,912 posts)as R-R asserted. IOW, he did his own homework. As did other economists. And perhaps he felt that was the appropriate way to go about disputing R-R. Just because O'Donnell hasn't been keeping up with what Dr. Krugman is actually doing (and he would know that if he read PK's columns and blog in the NYT). Hell, even I found PK's stuff and I can assure you I am no economist.
1StrongBlackMan
(31,849 posts)I can get with that.
I wasn't implying that O'Donnell raised the issue ... rather he was talking about the math error that sunk R&R and was saying PK was right. I just wondered why PK hadn't run the numbers/spotted the error himself. It would have saved us and europe years of pain.
But I guess there still remains a measure of professional courtesy left.
CTyankee
(63,912 posts)O'Donnell was siding with R-R. My bad. I shudda checked it out more thoroughly.
One think PK did say was that this whole thing showed a need for insisting on peer review before running with an econ theory that drives a political agenda.
Here's R-R's defense from today's NYT: http://www.nytimes.com/2013/04/26/opinion/reinhart-and-rogoff-responding-to-our-critics.html
1StrongBlackMan
(31,849 posts)I saw their response ... kind of weak, IMHO.
There is a reason that academic studies are peer-reviewed before they are given any credence by anyone that wants to avoid embarrassing citiations.
When I was in Grad school, my mentor give me two research "shortcuts", when a attempting to write on a topic that one is not intimately familiar with: First, go to Wiki, but ignore the text ... go to the peer reviewed citations; secondly, use the peer reviewed citation as your research starting point.
MFrohike
(1,980 posts)They only released the spreadsheets earlier this year, or late last year, after being asked since the paper was released. It wasn't possible to check their math until then because it wasn't available.
1StrongBlackMan
(31,849 posts)whose faculty does major research in a broad array of subjects.
In a recent conversation, one "academic research" told me ... "No one should trust the result of any study where the PI (Primary Investigatorch) does not provide the research data along with the study ... Period!"
MFrohike
(1,980 posts)Without the evidence, it's not much better than a guess.
yurbud
(39,405 posts)they were arguing backwards from the conclusion they knew they had to come up with ahead of time if they wanted to get paid instead of have integrity and starve.
Bill USA
(6,436 posts).. and Colbert's interview of the grad student who, when R&R finally let someone see their work found their rather spectacular errors.
http://www.colbertnation.com/the-colbert-report-videos/425749/april-23-2013/austerity-s-spreadsheet-error---thomas-herndon