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Showing Original Post only (View all)'The Excel Error Heard Round the World' [View all]
'The Excel Error Heard Round the World'
By Steve Benen
House Budget Committee Chairman Paul Ryan (R-Wis.), at the height of the Republicans' debt-ceiling crisis in 2011, said he and his party were justified in prioritizing immediate debt reduction. Economists, he said at the time, "tell us that letting total debt rise above 90% of GDP creates a drag on economic growth."
Ryan didn't say which economists, but it didn't much matter since everyone knew exactly what he was referring to. Carmen Reinhart and Kenneth Rogoff published a report a few years ago that conflicted with the findings of many economists, but told Republicans exactly what they wanted to hear...Ryan, conservative activists, deficit hawks, the Washington Post editorial board, and the DC establishment waved around the Reinhardt/Rogoff study as definitive proof that debt reduction can't wait -- failing to reduce the deficit, or making it worse on purpose as nutty liberals like me prefer, makes an economic recovery practically impossible. Austerity measures, intended to reduce the budget shortfall, would in turn correct the problem help the economy grow.
The problem, of course, is that the Reinhardt/Rogoff study was wrong. In fact, it's wrong in a variety of important ways, which Mike Konczal summarized very well. Several scholars at the University of Massachusetts, Amherst replicated the results of the Reinhardt/Rogoff research and uncovered some serious problems...the most glaring: Reinhardt and Rogoff made a coding error in an Excel spreadsheet. Kevin Drum called it the "Excel Error Heard Round the World." (I think Kevin means that literally, since the Reinhardt/Rogoff study has helped bolster the austerity agenda in a wide variety of countries.)
How bad is it? Take a look at the chart I put together: according the Reinhardt/Rogoff research, once a nation's debt-to-GDP ratio tops 90%, the result is economic contraction. The revised research based on the same data points to 2.2% growth. It is, in other words, an enormously consequential error.
- more -
http://maddowblog.msnbc.com/_news/2013/04/16/17782034-the-excel-error-heard-round-the-world
By Steve Benen
House Budget Committee Chairman Paul Ryan (R-Wis.), at the height of the Republicans' debt-ceiling crisis in 2011, said he and his party were justified in prioritizing immediate debt reduction. Economists, he said at the time, "tell us that letting total debt rise above 90% of GDP creates a drag on economic growth."
Ryan didn't say which economists, but it didn't much matter since everyone knew exactly what he was referring to. Carmen Reinhart and Kenneth Rogoff published a report a few years ago that conflicted with the findings of many economists, but told Republicans exactly what they wanted to hear...Ryan, conservative activists, deficit hawks, the Washington Post editorial board, and the DC establishment waved around the Reinhardt/Rogoff study as definitive proof that debt reduction can't wait -- failing to reduce the deficit, or making it worse on purpose as nutty liberals like me prefer, makes an economic recovery practically impossible. Austerity measures, intended to reduce the budget shortfall, would in turn correct the problem help the economy grow.
The problem, of course, is that the Reinhardt/Rogoff study was wrong. In fact, it's wrong in a variety of important ways, which Mike Konczal summarized very well. Several scholars at the University of Massachusetts, Amherst replicated the results of the Reinhardt/Rogoff research and uncovered some serious problems...the most glaring: Reinhardt and Rogoff made a coding error in an Excel spreadsheet. Kevin Drum called it the "Excel Error Heard Round the World." (I think Kevin means that literally, since the Reinhardt/Rogoff study has helped bolster the austerity agenda in a wide variety of countries.)
How bad is it? Take a look at the chart I put together: according the Reinhardt/Rogoff research, once a nation's debt-to-GDP ratio tops 90%, the result is economic contraction. The revised research based on the same data points to 2.2% growth. It is, in other words, an enormously consequential error.
- more -
http://maddowblog.msnbc.com/_news/2013/04/16/17782034-the-excel-error-heard-round-the-world
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Just like those Faux News "errors" when they showed a (D) after the name of some crook.
hobbit709
Apr 2013
#2
A good example of the illusion of power in quatitative methods...when the result looks like
HereSince1628
Apr 2013
#5