UC Berkeley economist Barry Eichengreen draws lessons from controversy over the work of two Harvard economists that seemed to show that deficit spending is associated with a fall in GDP once the ratio of public debt to GDP passes the 90% mark.
The Reinhart/Rogoff incident reminds Eichengreen of the controversy that surrounded another economic study published back in 1974.
The brouhaha over Carmen Reinhart’s and Kenneth Rogoff’s article “Growth in a Time of Debt” may be the most conspicuous and incendiary scholarly controversy since 1974, when two earlier economists, Robert Fogel and Stanley Engerman, published a notorious book, Time on the Cross, defending the efficiency of American plantation slavery.
As with Time on the Cross, the Reinhart/Rogoff controversy, while ostensibly stemming from the authors’ statistical procedures, is actually rooted in the purposes to which others put their study.
Some of the results reported by Fogel and Engerman were used – not by the authors themselves, it should be noted – to challenge affirmative action and question the civil-rights movement. Similarly, some of the results reported by Reinhart and Rogoff have been used by politicians and others to justify fiscal austerity. ….
Statistics are helpful. But in economics, as in other lines of social inquiry, they are no substitute for proper historical analysis.
Barry Eichengreen, “Open-access economics“, Project Syndicate, 17 May 2013.
Read the full column. It is not gated and will not disappoint. Professor Eichengreen (born 1952) is best known for his book Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 (Oxford University Press, 1992).