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InsiderOnline Blog: May 2013

“Debunked” Might Not Mean What Liberals Think It Means

We keep hearing that researchers from the University of Massachusetts – Amherst have debunked Ken Rogoff and Carmen Reinhart. Rogoff and Reinhart’s work found that high levels of gross public debt lead to slower growth. The supposed debunkers are Thomas Herndon, Michael Ash, and Robert Pollin, who have published a paper that examines one of Rogoff and Reinhart’s papers. Herndon, Ash, and Pollin conclude that it contains “coding errors, selective exclusion of available data, and unconventional weighting of summary statistics.” Liberal commentators have used this “debunking,” to argue that the United States does not need to rein in spending. Those commentators are ignoring one fairly key point, however: After correcting Rogoff and Reinhart’s data, Herndon, Ash, and Pollin recalculated the relationship between gross public debt and economic growth and found that it remains negative and pronounced. Like Rogoff and Reinhart, they’ve found that economic growth suffers when gross public debt exceeds 90 percent of a country’s annual gross domestic product:

Currently, gross public debt exceeds 105 percent of gross domenstic product in the United States. [H/t: Just Facts Daily, May 6]

Posted on 05/08/13 02:20 PM by Alex Adrianson

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