The Reinhart-Rogoff error is probably the most famous Exel error in economics with huge consequences.
Their 2010 a paper, Growth in a Time of Debt https://www.nber.org/papers/w15639 convincing dataset to show that when external debt reaches 60 percent of GDP, annual growth declines by about two percent.
This only paper was used as top level politicians in the US and Europe to show that austerity is the only option. It started widely damaging pro-cyclical austerity policy during regression. The corrected result don't show any change in growth when debt to GDP ratio goes above 60 or 90 percent.
The paper claimed a -0.1% decline at 90%, not -2% at 60% as you mentioned, but only in advanced countries, data in emerging countries was much worse. The Keynesian economists who countered showed their data when extended over a longer timeframe and without weighting was actually +2% at 90%, this too seems be limited to advanced economies. High debt ratios in emerging markets still seems to have a negative correlation AFAIK.
Regardless, in practice, it looks like the study was completely ignored in the US anyway:
> to show that austerity is the only option. It started widely damaging pro-cyclical austerity policy during regression
I’ve found much of the fear mongering around austerity to be pretty overblown. It’s been pretty rare to find examples of austerity except for some cases in the EU where attempts to reign in debt in countries like Greece where it was 180% (and still is today). Otherwise almost all of the advanced countries have kept it around 60-100% even almost a decade since the recession.
Moderate Keynesian and monetarist policy remains incredibly popular following the recession and in many places higher debt only became more popular even during the good times.
Even looking at the American right, besides Paul Ryan’s failed proposal 9yrs ago, there’s little evidence of the debt being lowered even during republican majorities in Congress and Senate.
Yet if you follow Krugman and the like you’d think austerity has been a giant problem in the west.
The world’s a lot more boring and moderate than the fear mongerers like to admit.
> Yet if you follow Krugman and the like you’d think austerity has been a giant problem in the west.
I don't follow Krugman closely since he is not macroeconomist, but Krugman's back of envelope calculation was correct in the retrospect.
Obama's stimulus was roughly of what needed and half of what was needed was the result. (tax benefits are not proper stimulus). According to CBO the US economy was 6.8 percent below its potential translating into $2.1 trillion of lost production. Lives were destroyed permanently due to prolonged recession.
Their 2010 a paper, Growth in a Time of Debt https://www.nber.org/papers/w15639 convincing dataset to show that when external debt reaches 60 percent of GDP, annual growth declines by about two percent.
This only paper was used as top level politicians in the US and Europe to show that austerity is the only option. It started widely damaging pro-cyclical austerity policy during regression. The corrected result don't show any change in growth when debt to GDP ratio goes above 60 or 90 percent.