Thomas Herndon, a Ph.D. candidate at the University of Massachusetts' economics department, has spotted glaring errors by two eminent Harvard economists in a significant research paper. As he studied the spreadsheets received from Harvard's Carmen Reinhart and Kenneth Rogoff, he spotted some serious errors though it took him some time and repeated cross-checking to believe he was indeed right..
Among economics luminaries, Reinhart and Rogoff stand apart as their work has had enormous influence on the biggest policy debate recently. The duo have alreday served at IMF. Besides, Reinhart was also a chief economist at Bear Stearns while Rogoff worked at the Federal Reserve after attending Yale and MIT.
Their study that economic growth slows dramatically when government debt exceeds 90 % of a country's annual economic output, has been cited by policymakers globally as rationale for spending cuts. However, using the two professors' data, Herndon found that instead of a dramatic fall in growth, the decline was much milder, slowing to about 2.2 %, instead of the - 0.1 % that the duo had predicted.
Reinhart and Rogoff have admitted to a "coding error" in the spreadsheet regarding omission of some countries omitted from their calculations. But they deny omitting data or using a questionable methodology. But for Thomas, the findings mean that the claim of high public debt causing growth to stall no longer holds true. The profs have admitted to the serious gaffe. Now that Herndon has successfully challenged some eminent figures in his field, he is thinking of expanding his work into a full-fledged doctoral thesis.