4/26/2013 9:37 PM ET|
Who me? Austerity authors say don't blame them
The Harvard scholars behind a prominent but error-riddled 2010 paper promoting fiscal discipline aren't gaining sympathy with their defense.
As I reported earlier this month, their much-cited 2010 study claimed that withering "stagflation" can result when a country's ratio of debt to gross domestic product reaches 90%. Politicians such as Rep. Paul Ryan, R-Wis., who ran as Mitt Romney's vice presidential candidate, cited the paper in calls for austerity measures.
But their paper was found to have serious problems by economists at the University of Massachusetts at Amherst, including an embarrassing Excel flub that excluded data from five countries. As graduate student and debunker Thomas Herndon toldViacom's (VIA) Comedy Central host Stephen Colbert, "I really couldn't believe my eyes."
The difference was as stark as night and day. While Reinhart and Rogoff asserted that the economies of such debt-laden countries shrank, Herndon and his colleagues found the countries actually had positive growth.
Now, Reinhart and Rogoff have taken to the newspaper of record to provide their defense, and they're not convincing many people. (In a separate piece in the Times, they complain about receiving "hate-filled, even threatening, e-mail messages, some of them blaming us for layoffs of public employees, cutbacks in government services and tax increases.")
The pair write that they view themselves "as scholars, though obviously given the prominence of book, and the extraordinary circumstances of the financial crisis, politicians will of course try to use our results to advance their cause." They note that they never advised Ryan or worked for President Barack Obama.
Yet as Slate writer Matthew Yglesias notes, Rogoff "was writing op-eds drawing strong policy conclusions from this paper. He was delivering congressional testimony drawing strong policy conclusions from this paper. And it's not as if he's some political naif who stumbled down from the ivory tower into a partisan controversy he could never have predicted," since he served as research director at the International Monetary Fund.
The Center for Economic and Policy Research, meanwhile, wrote that their op-ed "deserves tears from crocodiles everywhere," adding that their portrayal of themselves as Ivory Tower academics who can't be blamed for real-word decisions made by governments "is disingenuous in the extreme."
But despite this debunking, calls for austerity continue, writes economist Paul Krugman, a Keynesian who has taken critical aim at austerity supporters, in a separate Times' opinion piece.
"Part of the answer surely lies in the widespread desire to see economics as a morality play, to make it a tale of excess and its consequences. We lived beyond our means, the story goes, and now we’re paying the inevitable price," he writes.
Follow Aimee Picchi on Twitter at @aimeepicchi.
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[BRIEFING.COM] The stock market ended the Thursday session on a mixed note ahead of Friday's nonfarm payrolls report for February (Briefing.com consensus 163K). The Dow Jones Industrial Average (+0.4%) and S&P 500 (+0.2%) posted modest gains while the Nasdaq Composite (-0.1%) lagged throughout the session.
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