It was only last week that a Tory MP was warning Coffee House of the dangerous impact that high levels of public debt can have on growth. Today that theory is fighting for its life, with the authors of the Harvard paper that developed it in the first place in the firing line for an error in a spreadsheet. If you haven’t been following the Reinhart and Rogoff row, here’s a quick catch-up: a paper from two professors and a doctoral student at the University of Massachusetts published this week argues that Carman Reinhart and Kenneth Rogoff of Harvard were wrong to reach the conclusion they did about a 90% debt to GDP ratio seriously affecting the growth of a country’s economy. Reinhart and Rogoff responded, acknowledging an error in their paper, but adding:
‘We do not, however, believe this regrettable slip affects in any significant way the central message of the paper or that in our subsequent work.’
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The academics have penned a detailed response to the Massachusetts paper, which you can read here.
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