Kenneth Rogoff, last year:
In a series of academic papers with Carmen Reinhart… we find that very high debt levels of 90% of GDP are a long-term secular drag on economic growth that often lasts for two decades or more.
Carmen Reinhart and Kenneth Rogoff, today:
Nowhere did we assert that 90 percent was a magic threshold that transforms outcomes, as conservative politicians have suggested.
I will admit, Carmen Reinhart did not run around the country claiming that we had to have austerity or we’d have slow or even negative economic growth. No, it’s always been Kenneth Rogoff. Just the same, we didn’t hear a peep from Reinhart that he was mischaracterizing their work. But let’s lay that aside for the moment. If Reinhart & Rogoff didn’t show that a 90% debt to GDP ratio was some bad tipping point, what was the big deal of their paper? Matt Yglesias answers this question, “The raw fact that there’s a statistical correlation between debt:GDP being high and GDP growth being low is trivial and offers no policy guidance.”
What we have here is a case of scientists riding a popular wave based upon an obscene overstatement (that they helped create) of their work. And then when their work is shown in no uncertain terms to not show what was claimed, they retreat back to the safety of scientific objectivity and caveats. This is totally unacceptable. Rogoff especially should be thrown out of the field. But of course he won’t be. He’s “elite.” And you know what that means: unless he’s caught tweeting pictures of his junk, he can’t be touched.