The Many Forms of Kenneth Rogoff: A Study in Neoclassical Economics Today

The opposition to austerity worldwide has been much strengthened by the loss of academic prestige incurred by the austerity camp in the field of economics. Carmen Reinhart and Kenneth Rogoff, both prominent neoclassical economists at Harvard University, were revealed to have made serious data errors in their influential paper on the history of public debt and its relation to economic growth. In this paper, “Growth in a Time of Debt”, the authors had argued that when “gross external debt reaches 60 percent of GDP”, a country’s annual growth declined by two percent, and “for levels of external debt in excess of 90 percent” GDP growth was “roughly cut in half.”(1) This has been widely seen as a major intellectual support for the austerity drive worldwide, and therefore the denouement of this paper has had a considerable impact. Not only did the paper leave out important data, but it also contained simple errors in spreadsheet calculation. This is all the more intriguing, and delicious for the press, because the counter-article’s co-author Thomas Herndon is still a graduate student, whereas Rogoff is one of the world’s most eminent neoclassical macroeconomists. Continue reading “The Many Forms of Kenneth Rogoff: A Study in Neoclassical Economics Today”