Excel Spreadsheet Error Completely Discredits Much-Cited GOP Austerity Study (VIDEO)

Thomas Herndon, a student at the University of Massachusetts at Amherst, has made quite a ripple in the economic community. Herndon has claimed that he has discovered flaws in a renowned journal article by the economists Carmen Reinhart and Kenneth Rogoff. The article in review is Reinhart and Rogoff’s well contested 2010 study ?Growth in a Time of Debt.? Unfortunately for the GOP, conservative politicians have continuously cited this article when arguing for increased austerity measures as opposed to additional spending or tax decreases.

Herndon argues that Reinhart and Rogoff’s results excluded three incidences of high growth during times of high debt in nations that include Australia, Canada, and New Zealand. Liberal economists like Nobel laureate Paul Krugman have disputed the Reinhart/Rogoff paper since its conception. Krugman cited the failure to demonstrate causality in their conclusions. In fact, the causality is the opposite. Countries experience high debt-to-GDP ratios because they develop slow growth.

Herndon quickly spotted an additional error. After unsuccessfully replicating the results with publicly available data, Herndon submitted a request to Reinhart and Rogoff for assistance. Herndon cited that Reinhart and Rogoff appear to have made an error with the collected data on their spreadsheet document that resulted in the exclusion of Belgium, a key counter-example. After announcing these findings, Herndon rapidly gained attention.


Analysts like Tyler Cowen suggest that Reinhart and Rogoff’s influence on the austerity debate has been overstated:

?The ?case for austerity? didn’t rest much on R&R in the first place, rather on the notion that the bills have to be paid, dawdling on adjustment is not always so easy, and the feasible sum of international redistribution is quite low.? (Washington Post)

The Excel equating error by itself is only responsible for about a 0.3% error in percentage points. The spreadsheet error is not fatal to the practice of austerity, but the errors do effectively discredit the study for all practical application and possibly remove any future impact Reinhart and Rogoff have on the economic community.

The substantial argument is over the selection of countries and time periods used for the study. Herndon concluded that with his inclusion of countries that counter the hypothesis given in the study, the results fluctuate 2.3%. The final blow to the study still remains that no causality was shown to prove that high debt-to-GDP cause slow growth. Rogoff and Reinhart should correct their article, revise their conclusions if warranted, and re-release the article and their information to the public rather than just bow out of the argument by default.

Below is the interview conducted with Herndon on April 23, 2013 on The Colbert Report:


Edited by AEK

I am a liberal from the overly conservative state of North Carolina, and to make a bigger distinction, I am a Secular Humanist. My goal is to objectively study and relay information in the pursuit of enlightenment; to confront and persuade people away from the pervasive ignorance of inequality. I aim to understand and appreciate all basic values in hopes to form a mutual understanding between my fellow women and men.