Three University of Massachusetts Amherst economists who found serious errors in a key study that lawmakers around the globe used as a cornerstone of austerity policies have been named to Foreign Policy magazine’s list of 100 Leading Global Thinkers of 2013.
Graduate student Thomas Herndon and professors Michael Ash and Robert Pollin were named to the “Challengers” category of the list, which was published in the November/December issue of Foreign Policy. The researchers received worldwide acclaim in April after posting online, a working paper that challenged a study by a pair of Harvard economists that had long been held as a reason for implementing austerity cuts in times of slow economic growth.
The UMass economists’ working paper, “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,” examined Carmen Reinhart and Kenneth Rogoff’s 2010 research on the relationship between public debt and GDP growth for advanced economies in the post-World War II period. Reinhart and Rogoff argued that the rate of economic growth for these countries has consistently declined precipitously once the level of government debt exceeds 90 percent of the country’s GDP. In recent years, Reinhart and Rogoff’s results have been highly influential as support for austerity policies in both Europe and the United States.
However, Herndon, Ash and Pollin found that a series of data errors and unsupportable statistical techniques led to an inaccurate representation of the actual relationship between public debt levels and GDP growth. They found that when properly calculated, average GDP growth for advanced economies at public debt-to-GDP ratios over 90 percent is not dramatically different than when debt-to-GDP ratios are lower, a fatal flaw that shattered the underpinning of conservative approaches to national debt and federal budgeting. Since April, Herndon, Ash and Pollin revised their initial working paper, taking into account, among other things, the responses to the working paper by Reinhart and Rogoff. The final version of their paper is scheduled to be published soon in the Cambridge Journal of Economics.
In the weeks and months following the report’s initial publication, its results received nearly as much global news coverage for how they were discovered as they did for the impact they had on global economic policy discussion. Herndon, the graduate student, had been issued a term paper assignment for an applied econometrics class taught by Ash, Pollin and Arindrajit Dube to replicate the findings of a well-known study using the study’s data set. After selecting the Reinhart-Rogoff report, Herndon found that after numerous attempts he was unable to replicate its findings using the data that was publicly available, so Ash and Pollin recommended that he contact Reinhart and Rogoff directly to request their original data spreadsheet. They sent Herndon the spreadsheet, and almost immediately he saw the errors that they had made. Pollin and Ash corroborated Herndon’s discovery, and together they authored the paper that would start a global political firestorm.
Numerous national and international television and radio programs interviewed the researchers, including Comedy Central’s hit show “The Colbert Report,” which had Herndon in-studio in New York to discuss his findings. Newspapers and magazines from all over the world reported and commented on the story, and Nobel Prize-winning economist Paul Krugman covered the issue closely for weeks in The New York Times.
Each winter, Foreign Policy recognizes the world’s preeminent thought leaders in a special issue featuring the year’s top 100 “Global Thinkers.” The widely cited list, an annual tradition that has become one of Foreign Policy’s most read features, offers a wide range of thinkers and visionaries, leaders and activists, from around the globe.
To commemorate the issue and celebrate the Global Thinkers and their accomplishments, on Dec. 11 the FP Group hosted a full day of events in Washington, D.C., involving the Global Thinkers and a large, influential audience from Washington and around the world. During the day, a program looked at global developments and the year ahead and featured keynote remarks by U.S. Secretary of State John Kerry and other senior American officials, diplomats and business leaders. The Global Thinkers played an integral role in the discussion. Capping off the festivities in the evening, members of the media, government leaders and business executives attended a gala reception honoring the Global Thinkers to discuss their ideas and their effects on the world. This has become one of the most prominent events to take place in Washington each winter.
Herndon, Ash and Pollin’s working paper, “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,” is available online.