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To be fair it wasn't their fault but the program that they were useing that had the mathematical errors. and they didn't say it would be impossible to have growth past 90% of debt to GDP they were argueing that it dragged it by 1% growth per year.
Still pretty embarrassing but probably won't change much in the grand scheme of things.
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JUST READING ABOUT THIS. Krugman's having a field day as he damn well should. More evidence people who believe in austerity are just stupid (PC version: selectively choose to ignore reality).
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Still not a good idea to have debt, least of all 15 digits of it. It's just common sense.
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I remember reading that paper back in December for debate preparation and thinking of all the historical examples that it didn't jive with.
Made a heck of a good card though.
Edit: AA, it's only a problem when you can't pay it back year to year, like the US is doing right now. As long as debt grows slower than the economy and is managed well, it should be a non-issue for most countries.
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On April 20 2013 02:39 Sermokala wrote:
To be fair it wasn't their fault but the program that they were useing that had the mathematical errors. and they didn't say it would be impossible to have growth past 90% of debt to GDP they were argueing that it dragged it by 1% growth per year.
Still pretty embarrassing but probably won't change much in the grand scheme of things.
Rogoff has been on numerous interviews including CNN mentioning the "dangers" of the 90% cliff. It had a major influence on WSJ's articles of the past 3 years
Hell, earlier this year, the WP used R-R's
http://www.washingtonpost.com/opinions/debt-reduction-hawks-and-doves/2013/01/26/3089bd52-665a-11e2-93e1-475791032daf_story.html
If it is even slightly off [here they are talking about the debt projections], debt-to-GDP could keep rising — and stick dangerously near the 90 percent mark that economists regard as a threat to sustainable economic growth.
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On April 20 2013 02:39 Sermokala wrote:
To be fair it wasn't their fault but the program that they were useing that had the mathematical errors. and they didn't say it would be impossible to have growth past 90% of debt to GDP they were argueing that it dragged it by 1% growth per year.
Still pretty embarrassing but probably won't change much in the grand scheme of things.
to my knowledge they were using excel and their spreadsheet had errors. you're not being fair.
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On April 20 2013 03:21 nunez wrote:Show nested quote +On April 20 2013 02:39 Sermokala wrote:
To be fair it wasn't their fault but the program that they were useing that had the mathematical errors. and they didn't say it would be impossible to have growth past 90% of debt to GDP they were argueing that it dragged it by 1% growth per year.
Still pretty embarrassing but probably won't change much in the grand scheme of things. to my knowledge they were using excel and their spreadsheet had errors. you're not being fair.
Yes see here the blue box should extend all the way down: ![[image loading]](http://www.nextnewdeal.net/sites/default/files/styles/large/public/content_images/reinhart_rogoff_coding_error_0.png)
The error didn't have a big impact on the results. The (now questioned) methodology had a much bigger impact. I'll let someone smarter than me explain it, and give a good conclusion on the dispute:
Second, not all of the difference between RR and HAP is attributable to the spreadsheet error which has become infamous this week. In fact, it appears that only 0.3 per cent stems from this, with another 0.1 per cent coming from a transcription mistake. The remainder of the difference is due to a combination of missing data in the original RR paper, and to a methodological dispute about how countries should be weighted to produce the final results. ...
In summary, the most dramatic version of the RR stylised fact is no longer a stylised fact. RR were right to argue that, over most normal periods, higher public debt has been associated with lower real GDP growth rates, but a sudden discontinuity at 90 per cent is not proven. Furthermore, causation might work in both directions, depending on economic circumstances. The timing of these effects is not a definitive indicator of true causation, and the relationship may be very different in a time of full employment from a time of high unemployment.
The moral of this story is that it is an illusion to expect that the complicated relationship between public debt and GDP growth will always and everywhere be the same.
Link
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On April 20 2013 03:31 JonnyBNoHo wrote:Show nested quote +On April 20 2013 03:21 nunez wrote:On April 20 2013 02:39 Sermokala wrote:
To be fair it wasn't their fault but the program that they were useing that had the mathematical errors. and they didn't say it would be impossible to have growth past 90% of debt to GDP they were argueing that it dragged it by 1% growth per year.
Still pretty embarrassing but probably won't change much in the grand scheme of things. to my knowledge they were using excel and their spreadsheet had errors. you're not being fair. Yes see here the blue box should extend all the way down: The error didn't have a big impact on the results. The (now questioned) methodology had a much bigger impact. I'll let someone smarter than me explain it, and give a good conclusion on the dispute: Show nested quote +Second, not all of the difference between RR and HAP is attributable to the spreadsheet error which has become infamous this week. In fact, it appears that only 0.3 per cent stems from this, with another 0.1 per cent coming from a transcription mistake. The remainder of the difference is due to a combination of missing data in the original RR paper, and to a methodological dispute about how countries should be weighted to produce the final results. ...
In summary, the most dramatic version of the RR stylised fact is no longer a stylised fact. RR were right to argue that, over most normal periods, higher public debt has been associated with lower real GDP growth rates, but a sudden discontinuity at 90 per cent is not proven. Furthermore, causation might work in both directions, depending on economic circumstances. The timing of these effects is not a definitive indicator of true causation, and the relationship may be very different in a time of full employment from a time of high unemployment.
The moral of this story is that it is an illusion to expect that the complicated relationship between public debt and GDP growth will always and everywhere be the same. Link
if i understand it correctly it would bring the average growth from -0.1 to +0.2 for countries with debt more than 90% of gdp.
from the horses mouth (reinhart & rogoff): the error had a significant impact.
but i was primarily objecting to serm giving them slack because the 'program had errors'. it's a spreadsheet. it's childs play.
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It's just a simple error that many of us make. The more important takeaway is that papers that are widely used by important decision makers should have their formulas public.
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On April 20 2013 02:39 Sermokala wrote:
To be fair it wasn't their fault but the program that they were useing that had the mathematical errors. and they didn't say it would be impossible to have growth past 90% of debt to GDP they were argueing that it dragged it by 1% growth per year.
Still pretty embarrassing but probably won't change much in the grand scheme of things.
Won't change much, but it should, George Osbourne, (the British Chancellor of the Exchequer, aka minister for the economy) based his entire economic budget on it, he quoted them multiple times in reports.
Unfortunately they won't back down.
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On April 20 2013 02:40 AnachronisticAnarchy wrote:
Still not a good idea to have debt, least of all 15 digits of it. It's just common sense.
No one says accumulating debt is 'good'. what they are saying is 'accumulating debt now, to get more people employed and then paying it off when the economy is growing stronger is better than on top of a weak economy instituting austerity' which is what the RR paper, its political advocates and even R when he gave interviews to conservative papers all suggested.
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Been saying this all along. Austerity is a pitfall, a publicity stunt with no substance. It retards economic growth and has far more damaging effects in the long run than any stimulus package.
It did horrible things to Europe and will do horrible things to the US if Obama caves in to right wing populists demanding massive spending cuts.
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How is this a "scandal"? It seems like a scientific paper was simply proven wrong. Unless they covered it up or knew of the mistake?
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Cayman Islands24199 Posts
On April 20 2013 03:31 JonnyBNoHo wrote:Show nested quote +On April 20 2013 03:21 nunez wrote:On April 20 2013 02:39 Sermokala wrote:
To be fair it wasn't their fault but the program that they were useing that had the mathematical errors. and they didn't say it would be impossible to have growth past 90% of debt to GDP they were argueing that it dragged it by 1% growth per year.
Still pretty embarrassing but probably won't change much in the grand scheme of things. to my knowledge they were using excel and their spreadsheet had errors. you're not being fair. Yes see here the blue box should extend all the way down: The error didn't have a big impact on the results. The (now questioned) methodology had a much bigger impact. I'll let someone smarter than me explain it, and give a good conclusion on the dispute: Show nested quote +Second, not all of the difference between RR and HAP is attributable to the spreadsheet error which has become infamous this week. In fact, it appears that only 0.3 per cent stems from this, with another 0.1 per cent coming from a transcription mistake. The remainder of the difference is due to a combination of missing data in the original RR paper, and to a methodological dispute about how countries should be weighted to produce the final results. ...
In summary, the most dramatic version of the RR stylised fact is no longer a stylised fact. RR were right to argue that, over most normal periods, higher public debt has been associated with lower real GDP growth rates, but a sudden discontinuity at 90 per cent is not proven. Furthermore, causation might work in both directions, depending on economic circumstances. The timing of these effects is not a definitive indicator of true causation, and the relationship may be very different in a time of full employment from a time of high unemployment.
The moral of this story is that it is an illusion to expect that the complicated relationship between public debt and GDP growth will always and everywhere be the same. Link
the weighing methodology was explained by paralleluniverse in the u.s. politics thread. basically they took 17 years of the UK over 90% data and considered that one single data point, with the same weighing as one year of -7.9% growth seen in new zealand in the one year they were over 90%.
you can see both in that spreadsheet. the countries are analyzed sort of as individual cases separated by debt to gdp ratio buckets, but without specifying how many years are included in each bucket. so the U.S. may have say, 10 years of over 90% and the U.K. 1 year, you'd never be able to tell from the way they aggregate.
I think this is not a deliberate manipulation. they wanted to establish trends within each country, to the effect that "there's higher growth for debt under 30%, and somewhat slowing at above 90% relative to the other debt ranges." then from those individual country cases, they aggregate for a cross country trend. their unweighted aggregate of all the countries was probably meant to aggregate "cases" instead of years. however, this doesn't account for sample strength difference across the cases.
http://delong.typepad.com/sdj/2013/04/gavyn-davies-on-reinhartrogoff.html
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On April 20 2013 04:32 McBengt wrote:
Been saying this all along. Austerity is a pitfall, a publicity stunt with no substance. It retards economic growth and has far more damaging effects in the long run than any stimulus package.
It did horrible things to Europe and will do horrible things to the US if Obama caves in to right wing populists demanding massive spending cuts.
In many cases European austerity is supposed to do 'horrible things' - part of internal devaluation.
Austerity in the US is mainly capping spending growth so it's doubtful that it will be as harmful. You can certainly still make an argument that there's a large opportunity cost (lost growth due to lack of stimulus) but there's no guarantees on that.
On April 20 2013 04:44 oneofthem wrote:Show nested quote +On April 20 2013 03:31 JonnyBNoHo wrote:On April 20 2013 03:21 nunez wrote:On April 20 2013 02:39 Sermokala wrote:
To be fair it wasn't their fault but the program that they were useing that had the mathematical errors. and they didn't say it would be impossible to have growth past 90% of debt to GDP they were argueing that it dragged it by 1% growth per year.
Still pretty embarrassing but probably won't change much in the grand scheme of things. to my knowledge they were using excel and their spreadsheet had errors. you're not being fair. Yes see here the blue box should extend all the way down: The error didn't have a big impact on the results. The (now questioned) methodology had a much bigger impact. I'll let someone smarter than me explain it, and give a good conclusion on the dispute: Second, not all of the difference between RR and HAP is attributable to the spreadsheet error which has become infamous this week. In fact, it appears that only 0.3 per cent stems from this, with another 0.1 per cent coming from a transcription mistake. The remainder of the difference is due to a combination of missing data in the original RR paper, and to a methodological dispute about how countries should be weighted to produce the final results. ...
In summary, the most dramatic version of the RR stylised fact is no longer a stylised fact. RR were right to argue that, over most normal periods, higher public debt has been associated with lower real GDP growth rates, but a sudden discontinuity at 90 per cent is not proven. Furthermore, causation might work in both directions, depending on economic circumstances. The timing of these effects is not a definitive indicator of true causation, and the relationship may be very different in a time of full employment from a time of high unemployment.
The moral of this story is that it is an illusion to expect that the complicated relationship between public debt and GDP growth will always and everywhere be the same. Link the weighing methodology was explained by paralleluniverse in the u.s. politics thread. basically they took 17 years of the UK over 90% data and considered that one single data point, with the same weighing as one year of -7.9% growth seen in new zealand in the one year they were over 90%. you can see both in that spreadsheet.
That sounds right. I don't know if their methodology was appropriate or not. I'm going to need some time to let my opinion on that germinate.
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On April 20 2013 04:40 Slaughter wrote:
How is this a "scandal"? It seems like a scientific paper was simply proven wrong. Unless they covered it up or knew of the mistake?
The right is winning a lot of elections in the EU right now due to the "austerity" movement that they've championed. People want to blow this up like it invalidates all austerity people so the liberals can get debt much further then that and not have to care again about balanced budgets.
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Seems weird to me that nobody noticed this before, especially because this is a famous paper. In physics, and most scientific fields I would assume, before a paper gets published, many people will review data and methodology. It's only worse if that paper makes a significant statement. Then, most paper that get published will get challenged if there is anything questionable.
I can't believe how not tight this is =/. Messing up on a spreadsheet is pretty weak... It's not like they needed this spreadsheet absolutely, averaging 20 numbers with half of them n.a. takes a second. No offense but it seems outrageous to me that they wrote an entire paper based on this data, never rechecking that everything was in order. I check and recheck my data so much and I'm in still learning -_-, my experiments are worthless and purely academic. That their methodology sucks makes me despair even more.
I find it so hard to take the economy seriously.
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I respectfully request a proper hyperlink to the related Reuters article. The current one does not function.
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On April 20 2013 04:32 McBengt wrote:
Been saying this all along. Austerity is a pitfall, a publicity stunt with no substance. It retards economic growth and has far more damaging effects in the long run than any stimulus package.
It did horrible things to Europe and will do horrible things to the US if Obama caves in to right wing populists demanding massive spending cuts.
And evidence like this goes to show why people who believe increasing debt will never hurt the economy are stupid. It's obvious that time will prove the theories of people like R-R false, there's no surprise there. But that doesn't give kids like you the right to make wild claims supported by no evidence and expecting the world to take you seriously. Grow up.
Also how is this a scandal? Paper being debunked =/= scandal; it's called "debunking". Where did the scandal come from?
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EPT
