I dont geek out on economics much on FB anymore but this handed me an old axe to grind. Remember the high levels of debt cause growth to slow mantra after the Recession? I said it too because it sounds so plausible--debt repayments will take resources that could be used for growth activities--and then I learned about the actual study that was done that came to that conclusion. (It is called the Reinhart-Rogoff study.) Turns out there was an Excel error in the spreadsheet used in the study. It was caught by a graduate student (I reveled in that since I was in grad school at the time). The authors of the study simply failed to include all the relevant cells in their Excel formula--we can all relate. Conservative commentators came out afterward and said there was still a correlation between high debt levels and slowed growth--but they would always fail to mention the correlation was only 2%. This is a clear indication of biased reporting, leaving out facts that contradict our previously held conclusions. Do I advocate high levels of debt? Of course not--Im a good conservative. But I also wont continue to say it will do something that it doesnt.
Posted on: Tue, 16 Dec 2014 12:55:27 +0000
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