Until yesterday, politicians who wanted to raise taxes and cut government spending frequently cited a 2010 paper by Carmen Reinhart and Kenneth Rogoff called "Growth in a Time of Debt." The paper implied that high public indebtedness leads to slower economic growth.
Yesterday, it was revealed that the authors' methodology, choice of data and competence with the Microsoft Excel spreadsheet were all found wanting. When it comes to policymaking, this news changes very little: the Reinhart-Rogoff paper was always a flimsy justification for fiscal austerity.
