- by New Deal democrat
Since Bonddad, along with everybody else, has already weighed in, let me put in my $.02 about the Reinhart and Rogoff bombshell.
First of all, you should take everything that you have read about this story since it broke - including this post - with multiple grains of salt (with the exception of the spreadsheet error, which Reinhart and Rogoff have admitted to. Supposedly, however, the spreadsheet error only changes the ultimate result as to highly indebted countries by 0.3%. The other two criticisms - which have to do with methodology and potentially cherry-picking - have a much larger impact on the results.). That's not because the revelations are false, but rather because nobody has had time to give the revelations sober reflection. After a week or two, it may turn out that the scale of the story is accurate. Or there may be less to the story than initially meets the eye. Or the repercussions could be even bigger (particularly if the suggestion that the authors cherry-picked their data turns out to be the truth). It's never sexy to wait until the dust settles, but in matters like this (and just like not jumping to conclusions about the Boston Marathon bombing), boring is better and more accurate.
But let's proceed with the assumption that all three criticisms of the Reinhart and Rogoff study are appropriate and accurate, as is the contention that Reinhart and Rogoff supposedly refused to share their raw data until recently.
If this were a study in physics or biochemistry or psychology, there would almost certainly be major reputational consequences. But far more importantly, if the results of a major study were found to be substantially flawed in a way that almost completely undercut the claimed results, professionals in the field would change their minds, or at least be far more measured and circumspect in their conclusions as to the point in question.
So this controversy is a case study as to the nature of the economics profession itself. If the critique holds up, does anybody change their mind? If nobody changes their mind; if no economist who supported austerity based on Reinhart and Rogoff so much as qualifies their opinion; then it will be evidence that economics - at least as practiced by broad swaths of the discipline - is not science, since data and results do not cause a change in underlying ideologies.
So this isn't an "Emperor has no clothes" moment for Reinhart and Rogoff alone, or just economists supporting austerity. This is an "Emperor has no clothes" real live test of a large portion of the profession of economics itself.
From Bonddad: what NDD said.