Grad Student Who Shook Global Austerity Movement

Er, no. Reinhart and Rogoff's paper was published in 2010. The debate of keynesian stimulus vs. austerity vs. non-interventionism is much, much older than that.

I liked Graeber's recent _Debt: The First 5000 Years_. If you can't easily obtain/afford it, IIRC the author recommended just downloading it from somewhere. (http://www.amazon.com/Debt-First-5-000-Years/dp/1933633867)

BTW, this quote from the article is telling: "But because he was a lowly graduate student asking favors of some of the most respected economists in the world, he got no reply, until one afternoon..." You know, the "favor" of doublechecking their dangerously buggy academic product for them.

Maybe that was a terrible exaggeration from the journalist. Who knows what happened in this particular case? But in contrast, Graeber, who couldn't even be considered for a professor job in North America (but gets jobs elsewhere, like the London School of Economics), said: "What collegiality means in practice is: 'He knows how to operate appropriately within an extremely hierarchical environment.' You never see anyone accused of lack of collegiality for abusing their inferiors. It means 'not playing the game in what we say is the proper way.'" (http://chronicle.com/article/A-Radical-Anthropologist-Finds/...)

(Afterwards, Graeber tweeted, "in the interview I added "you can be accused of 'lack of collegiality' for being too nice." That is, too nice to students." One reason the dismal pseudoscience gets even little things wrong.)

Unlikely though, for the same reason that Herndon didn't contact Reinhart and Rogoff about the error. Academics are even more interested in getting attention than they are in getting to the truth.

Which is why this episode is more likely to discourage publication of data than encourage it.

You have been warned - the further fields get from pure mathematics and isolated systems - the faultier they must become, and the harder they are to verify (although in this case - it was trivially easy - but then again IIRC the paper wasn't published in a peer-reviewed journal).

Hence, before accepting X new fact in higher dimensional fields - do your own verification first.

Also - who on earth thought austerity was ever a good idea?

If you can afford to borrow - and consumer spending is dead - bring it back. The US should load up on as much debt as possible - I'd love to get cash at a 1-2% interest rate - it's a freaking awesome deal.

The paper came out in 2010, after much of the austerity debate had already crystallised, and got attention almost entirely in the US, which hasn't really implemented austerity. (No, the sequester really doesn't count.) Nor did the paper argue strongly in favour of austerity; the authors actually are pro-stimulus, and Rogoff in particular was very concerned over the effects of the Fiscal Cliff.

Actual austerity has mostly happened in Europe, where nobody really cared about the paper. The average German voter has no idea who Reinhart and Rogoff are, and he certainly doesn't care that some model showed that further loans to Greece might be correlated with somewhat lower Greek growth in the future; he's sick of the bailouts, thinks Greeks are congenitally lazy, and is afraid Germany won't get their loans back. In fact, what has actually happened in Greece is pretty much what Reinhart and Rogoff warned against! (Debt loads get too high, bond markets freak, growth craters. It's the most obvious explanation for the correlation Reinhart and Rogoff noted, and it's pretty much exactly what happened in Europe.)

Meanwhile, the actual spreadsheet errors changed their results from growth of -0.1% in high-debt countries to 0.2%; an inconsequential change. Nor is this surprising; the reason nobody looked too closely at the numbers is because they agree broadly with every other paper and model out there.

TL;DR: Reinhart and Rogoff caused austerity? Lolwut?