Despite Flaws, Harvard Economists Stand By Research

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At what point does debt start to drag down an economy? Harvard economists Carmen Reinhart and Ken Rogoff have argued that a debt to GDP ratio of 90 percent is a red line of sorts. That idea is under attack with economists from the University of Massachusetts charging that Rogoff and Reinhart used selective data to make their case.


Two prominent Harvard economists have admitted there are errors in an influential paper they wrote on government debt. This paper was widely cited in recent budget debates. But the economists insist their mistakes do not significantly change their research.

NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: In their 2010 paper, Ken Rogoff and Carmen Rinehart argued that economic growth falls significantly when a country's debt level rises above 90 percent of its Gross Domestic Product or GDP.

The paper has frequently been cited by critics of government spending, both in the United States and abroad, to justify austerity measures. Here is House Budget Committee Chairman Paul Ryan.

REPRESENTATIVE PAUL RYAN: Economists who have studied sovereign debt tell us that letting total debt rise above 90 percent of GDP creates a drag on economic growth and intensifies the risk of a debt-fueled economic crisis.

ZARROLI: But Thomas Herndon, a 28-year-old economics student at the University of Massachusetts at Amherst, decided to re-examine the 90 percent data as part of a class project.

THOMAS HERNDON: Something inside me told me that, you know, I just didn't really buy their results at the first glance.

ZARROLI: Herndon and his colleagues at UMass discovered that Rogoff and Rinehart made certain spreadsheet errors and left out data in a way that skewed the final results. The revised numbers suggests that economic growth still drops off as debt levels rise, but not as much as Rogoff and Rinehart said.

HERNDON: That's a pretty large change, and it really takes away a lot of the, I think, the urgency of their claim.

ZARROLI: In a statement released late Monday, Rogoff and Rinehart acknowledged mistakes and they said the errors were sobering, but they defended the study. They said if the report omitted any data, it's only because the numbers hadn't been released at the time it was written. And they have taken steps to update them on their website. They also said the revisions don't change the essential nature of their findings that growth drops as government debt levels rise.

Jim Zarroli, NPR News, New York.

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