Economists don't agree: So what else is new?

Flaws Are Cited in a Landmark Study on Debt and Growth

By ANNIE LOWREY, NYT
3:55 p.m. | Updated with response from Professors Reinhart and Rogoff.

An influential 2010 economics paper by Carmen Reinhart and Kenneth Rogoff showed that countries with high levels of debt experienced significantly slower rates of growth – and became a justification for many countries to adopt austerity budgets to hold down their debt loads. Now a provocative new paper is arguing that the paper was seriously flawed, in part because of basic calculation errors in a spreadsheet.

Because policy makers, economists and journalists have repeatedly cited the Reinhart-Rogoff paper in recent years, the new paper is causing a significant stir, with commentary from across the economics blogosphere.

Responding to a request for comment, Ms. Reinhart and Mr. Rogoff sent a statement Tuesday afternoon that said that a “cursory look” at the new study indicated to them that it supported their basic findings. (Their full response is below.)

Here is a sense of the controversy.

(More here.)