US Debt and Lying With Statistics

A study in 2010 by Carmen Reinhart and Kenneth Rogoff resulted in a book This Time is Different that has been lauded by just about everyone on the planet as a masterpiece of economic research.  It's ultimate conclusion is that countries with debt/GDP above 90% of GDP experience slower growth than those who don't, and has been the foundation of the "Austerity" mania infecting the GOP and conservatives worldwide. 

Paul Ryan's Path to Prosperity budget states their study "found conclusive empirical evidence that [debt] exceeding 90 percent of the economy has a significant negative effect on economic growth." The Washington Post editorial board takes it as an economic consensus view, stating that "debt-to-GDP could keep rising — and stick dangerously near the 90 percent mark that economists regard as a threat to sustainable economic growth."

The only flaw in the argument is that the authors had an Excel typo that affected the results, they used some dubious mathematical assumptions, advanced unjustified cause - effect reasoning, and cherry-picked their data.  This Article goes through their work and points out that if the errors their work was corrected, they would have come to the opposite conclusion! 

This book has been cited by just about everybody on the planet as the intellectual proof that high debt retards growth, and now it has been revealed to be dangerously wrong.

See this blog entry in the Washington Post for a response by Rogoff.