Brief notes before April 17th macro lecture

Next lecture

We’re going to continue to talk about Economic growth (obviously); i.e. very general causes of growth and “growth accounting.”

Other interesting stuff

So, the big news in Economics blogging is that a fairly influential study by Carmen Reinhart and Ken Rogoff was alleged in a new paper by Herndon, Ash and Pollin to have a lot of errors, stuff like using the wrong part of key Excel files (I originally wrote “found” instead of “alleged,” but honestly I haven’t worked through the errors myself, and I don’t care enough about this issue to take the time to do it properly.  Plus it’s been less than a day, so the new paper could have errors too).

  • The new critical working paper that discusses the errors is here: Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogo ff
  • Mike Konczal has a writeup on the “rotary bomb” blog, and Annie Lowrey has one at the NYT’s Economix blog that does a good job of putting the original paper in context.
  • Reinhart and Rogoff’s response is available through Business Insider (I’m not sure why, but I can’t find a “more original” copy of their response).  I feel obliged to point out that it’s very unusual for R&R to claim that their upcoming Journal of Economic Perspectives paper will vindicate their American Economic Review paper (which is the one alleged to have errors); the AER is almost certainly the most prestigious journal in economics, and the JEP is meant mainly to disseminate research to a wide audience and not so much for original findings.  So the AER paper should be the best and most correct version of the project.  (This was so unusual, in fact, that I verified that the “AER” publication was really a Papers and Proceedings article… and no one still reading cares about that distinction so I’ll stop there.)  (the JEP paper is available here)
  • Some comments by Tyler Cowen and Paul Krugman (and another one after their response).
  • I’ve read a lot of posts on this and there’s a clear political angle in the people attacking the paper: R&R’s paper had been interpreted as giving evidence that high debt was historically very bad and was used as justification for austerity policies; so people who opposed the austerity policies are happy to see this paper go down.  I’ve tried to find some conservative econ bloggers to balance out these links, but haven’t been able to find anyone discussing the paper.  Regardless, it’s seemed all along to me that this paper and R&R’s research program wasn’t going to tell us very much about the effects of high debt now, even without any errors; they’re looking at historical aggregates, but this seems like an issue where specifics matter a lot (and I know that it’s easy for me to make that claim now, don’t worry).

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