Outspoken progressive New York Times columnist and economist Paul Krugman has found himself in a public dispute with two Harvard University professors regarding austerity and the real dangers of debt levels can have on economic growth.
Krugman writes in "How the Case for Austerity Has Crumbled" for the June 6 issue of The New York Review of Books that claims in the 2010 paper by Harvard Professors Carmen Reinhart and Kenneth Rogoff, "Growth in a Time of Debt," were flawed by coding errors, data omissions and "peculiar statistical techniques" that "suddenly made a remarkable number of prominent people look foolish." Krugman writes:
The real mystery, however, was why Reinhart-Rogoff was ever taken seriously, let alone canonized, in the first place. Right from the beginning, critics raised strong concerns about the paper’s methodology and conclusions, concerns that should have been enough to give everyone pause.
Krugman goes on to further criticize Reinhart and Rogoff for not making data from their report widely available, and argues that "researchers working with seemingly comparable data hadn't been able to reproduce their results."
Reinhart and Rogoff responded with an extensive open letter to Krugman on Reinhart's personal website that calls the New York Times columnist's writing on their paper in recent weeks "spectacularly uncivil behavior."
We admire your past scholarly work, which influences us to this day. So it has been with deep disappointment that we have experienced your spectacularly uncivil behavior the past few weeks. You have attacked us in very personal terms, virtually non-stop, in your New York Times column and blog posts. Now you have doubled down in the New York Review of Books, adding the accusation we didn't share our data. Your characterization of our work and of our policy impact is selective and shallow. It is deeply misleading about where we stand on the issues. And we would respectfully submit, your logic and evidence on the policy substance is not nearly as compelling as you imply.
You particularly take aim at our 2010 paper on the long-term secular association between high debt and slow growth. That you disagree with our interpretation of the results is your prerogative. Your thoroughly ignoring the subsequent literature, however, including the International Monetary Fund's work as well as our own deeper and more complete 2012 paper with Vincent Reinhart, is troubling. Perhaps, acknowledging the updated literature-not to mention decades of theoretical, empirical, and historical contributions on drawbacks to high debt-would inconveniently undermine your attempt to make us a scapegoat for austerity. You write "Indeed, Reinhart-Rogoff may have had more immediate influence on public debate than any previous paper in the history of economics."
Setting aside this wild hyperbole, you never seem to mention our other line of work that has surely been far more influential when it comes to responding to the financial crisis.
The five-page letter is accompanied by a four-page appendix.
The 2010 paper was widely-cited by austerity advocates and fiscal conservatives as a justification for cuts to public spending after the financial crisis. The Wall Street Journal notes that Reinhart and Rogoff's findings came under a cloud last month when a graduate student at the University of Massachusetts Amherst found a spreadsheet error in the Harvard professors' calculations when attempting to replicate the paper for an econometrics homework exercise. Reinhart and Rogoff conceded the error but stood by their findings, publishing a correction to the 2010 paper on their website this month.
The Reinhart-Rogoff paper, University of Massachusetts response, and Krugman quarrel have been a hot topic of conservation in economist conservations of late. Southern Methodist University Professor Robert Lawson joined 'Wilkow!' Tuesday to discuss the debate, watch a clip from the segment below: