Reinhart and Rogoff issue correction

Economists Carmen Reinhart and Kenneth Rogoff have published a formal correction for their seminal 2010 paper “Growth in a Time of Debt,” prompted by the highly-publicized critique by Thomas Herndon, Michael Ash and Robert Pollin.

“This note is an erratum to our paper and not a response to Herndon et.al,” they stress, though they do take some shots at their critics, noting that the Herdon paper is”silent on the results of the longer sample dating back to the 1800s for most of the advanced economies and the exercise on emerging markets that are part of our May 2010 paper. It also fails to mention that our median estimates for the post war sample are very close in magnitude to the averages that they present.”

They do, however, acknowledge an excel coding error that excluded data from five countries based on their place in the alphabet, as well as the exclusion of some data from Spain and New Zealand. With the errors corrected, the most highly publicized finding of the original paper, that “median growth rates for countries with public debt over roughly 90 percent of GDP are about one percent lower than otherwise” is no longer the case. 

Here are the updated numbers, which still show a correlation between debt levels and growth, but without the magic 90 percent figure:

Via Justin Sandefur