Analytical and political sins of Reinhart and Rogoff

I read Reinhart and Rogoff's book "This Time is Different..." Very good piece of empirical work.

As a graduate student, I also enjoyed the now classic textbook by Obstfeld and Rogoff when it was still in manuscript form. I learned that the Keynesian ideas were alive and well even with a rigorous micro-foundation supplied to it.

But I would agree that Reinhart and Rogoff did commit an analytical sin in their 2010 paper about growth and debt, that 90% debt-to-GDP is somehow a clear marker for dramatic slower growth. It turned out there was an Excel error and an unconventional weighting scheme that caused the result.

Paul Krugman has been merciless in criticizing Reinhart and Rogoff position regarding 90% debt level, mainly because their paper had provided the wrong intellectual support for austerity policies. At times like post financial crisis of 2008, economists have the responsibility to provide sound economic advice based on sound empirical and theoretical work. When you mis-led in a critical way, you've done so much more harm than in other times. This is not the usual academic discourse, it is political with immense economic consequences.

In their latest response, it looks to me they didn't really address the analytical and political sins pointed out by Krugman many times on his blog. The way I read it, Krugman never sees it as a personal matter, it has always been about policy response to the crisis.

When you've committed a coding error like that, what should you do? They should really go back and clear up the wrong messages that have been sent by economists and politicians based on their mis-leading result. They didn't do that. So the sins remain.

Of course, Reinhart and Rogoff are not the only ones to blame for claiming that 90% debt level is the alarming threshold. Commentators and politicians bear even more responsibilities seizing on this highly debated piece of sloppy work as "proof" that austerity was the right response to the crisis.