The economics blogosphere is buzzing about the errors that were recently exposed in an influential paper by Carmen Reinhart, Vincent Reinhart, and Kenneth Rogoff, which claimed that countries with high levels of debt tend to have slower economic growth. See Mike Konczal for the summary or here for the full paper by Thomas Herndon, Michael Ash, and Robert Pollin.

In short, the original Reinhart-Rogoff paper had three significant problems, ranging from cherry-picking data, to dubious weighting schemes, to — most embarrassing of all — an Excel spreadsheet error that accidentally left out several crucial data points.

The reaction of the left-wing peanut gallery has been to ridicule liberals for caring about this at all. Obsessing over the analytical missteps in this paper reeks of the preoccupation with having correct and empirically supported arguments, while ignoring the importance of power and ideology. For while this new critique of Reinhart-Rogoff just now became possible because they finally made their original data available, plenty of people pointed out earlier that the whole analysis rested on shaky conceptual foundations. It used a correlation to assert that high debt to GDP ratios lead to slower growth, ignoring the much more plausible theory that the causal order was the opposite, with slow growth leading to increasing debt loads. If the political elite in Washington failed to heed these criticisms, it wasn’t because they were unaware of them, but because the claim that debt leads to slow growth fit a deficit hysteria that was already entrenched. In other words, Reinhart-Rogoff was being used as rhetorical cover for a pre-existing position, not as an actual empirical aid to decision-making.