By now, it is well known, at least in wonkish circles, that the economists Reinhart&Rogoff (R&R) made a number of errors in deriving their highly influential finding that debt-to-GDP ratios above 90% lead to slower growth. Kudos to the various academics and bloggers who dug into this—particularly Herndan et al, who most recently found and documented the spreadsheet error and other questionable practices in R&R’s work, Mike Konczal who neatly summarized the critique, and Bivens and Irons, who back in 2010 showed the R&R thesis to be deeply flawed (and here’s a smart oped by Herndon’s co-authors).
Yet, as I noted in my brief review of this the other day, neither the older nor the more recent revelations are likely to have much impact on policy (or even, it would seem, on R&R, whose response has pretty been much been, “yeah, ok…but if we did it right, we still woulda got the same answer”). In the first place, the fatal error in their work was not the spreadsheet error. It was ignoring context (the unique, country, and time-specific reasons why is debt/GDP is rising) and thus conflating correlation with causality, specifically, periods when it’s slow growth leading to higher debt.
Why wouldn’t we expect a reaction from policymakers? Because they’re using research findings the way a drunk uses a lamppost: for support, not for illumination. If the R&R lamppost turns out to be wobbly, the austerions (or climate-change deniers, or supply-siders) will find another one. In this town, I’m sorry to say, you can pretty much go think-tank shopping to buy the result you seek.