Jon Chait at New York Magazine has a great piece on the Reinhart/ Rogoff report, which formed the basis of all the Paul Ryan/ Simpson-Bowles/ Washington Beltway media received -- and self-perpetuating -- wisdom that incurring debt while stimulating the economy is berry berry bad, austerity is berry berry good. Here's a taste:
If you ever follow American politics — if you glance at a newspaper, or have a Sunday morning talk show on in the background — you have probably heard the following fact: Economists believe that the national debt causes the economy to slow once it reaches 90 percent of the size of GDP. Even if you don’t remember this fact, it is embedded so deeply in the reporting and commentary on Washington that its influence is unmistakable.
The provenance of this fact is a paper by the economists Carmen Reinhart and Kenneth Rogoff. It turns out the paper was wrong. Some other economists tried to replicate its findings and discovered some basic errors. They left several crucial historical examples out of their study and miscoded some other cases on their spreadsheet. When fixed, the errors change the finding."Changed the finding," or to paraphrase Chait, "Sorry about all that unnecessary unemployment and suffering, folks!" We await tomorrow's mea culpa editorial in the
