Oooops...

[Lamplighter]

I think we need a thread for public blunders...

Los Angeles Times
Michael Hiltzik
4/16/13

How an Excel error fueled panic over the federal debt

One of the most fearsome statistics in the war against the federal deficit
has always been the country's ratio of debt to gross domestic product.
When this ratio reaches 90%, the argument goes, watch out --
<snip>

This idea comes from Harvard economists Ken Rogoff and Carmen Reinhart,
who featured it in a 2010 paper and popularized it in a book entitled
"This Time is Different: Eight Centuries of Financial Folly."<snip>

A new study by three researchers at the University of Massachusetts finds
that Rogoff and Reinhart made several mistakes that invalidate their thesis.<snip>

Most important, they made a spreadsheet error that resulted in their leaving five countries
out of an all-important average of countries with higher than 90% debt-to-GDP ratios.
By restoring the full average, the UMass authors say, the growth rate for countries
in that range becomes 2.2%, not the -0.1% cited by Rogoff and Reinhart.
That makes the average growth rate at that ratio "not dramatically different
than when debt/GDP ratios are lower."<snip>

Rogoff and Reinhart haven't yet responded to the UMass paper.
But if the new analysis holds up, it knocks a key leg out from under the argument
that our economic growth depends on cutting the deficit and reducing the national debt without delay.
<snip>

Now, who will be the first to quote Regan and Chenney