PARIS – Controversy is essential to the advancement of science. So the debunking of methodological flaws and a coding error in a paper by the economists Carmen Reinhart and Kenneth Rogoff is just part of everyday life in academia. Yet coverage of the controversy by the news media and the blogosphere has been astonishingly intense – and simplistic.
“Growth in a Time of Debt,” the short 2010 paper in which Reinhart and Rogoff claimed that public debt starts to have a significantly detrimental effect on economic growth once it reaches 90% of GDP, was never a celebrated piece of economic research. As a rough empirical characterization of stylized facts, it was received somewhat skeptically by the academic community, and both authors were known for much more noted contributions. Google Scholar, the academic search engine, records more than 3,000 academic citations of Rogoff’s most cited paper, compared to less than 500 for “Growth in a Time of Debt.”
What would have normally remained a subject for post-seminar small talk has, however, become a topic for discussion by journalists, commentators, and policymakers. For all of them, what matters is that the sorry fate of the Reinhart/Rogoff paper undermines the case for fiscal austerity.
A few months ago, Olivier Blanchard, the International Monetary Fund’s chief economist, had already criticized his colleagues and policymakers in advanced countries for systematically underestimating the recessionary impact of fiscal consolidation programs. The debacle of the Reinhart/Rogoff paper is widely regarded as another, fatal illustration of austerity’s shaky intellectual foundations.