The Shardelay Thesis: Spreadsheets Rule the World

[FunkySwerve]

www.nextnewdeal.net/rortybomb/researchers-finally-replicated-reinhart-rogoff-and-there-are-serious-problems

"well, all I can hope is that future historians note that one of the core empirical points providing the intellectual foundation for the global move to austerity in the early 2010s was based on someone accidentally not updating a row formula in Excel."

Funky

[Paradoom]

Very interesting find funky. Funny and shocking at the same time. This proofs once more: don't believe in any statistical table, unless you manipulated it's results yourself!

[chirality]

Awesome. Thanks for sharing.

Also loving reading "Next New Deal" posts as well (two or three times since I don't really understand most of it).

"A standard way of doing this is using a "distributed lag" model - which just means regressing GDP growth on a set of leads and lags in debt to GDP ratio, and then forming an "impulse response" from, say, a hypothetical 10 point increase in the debt-to-GDP ratio (where 100 is when the debt level is equal to GDP).

Figure 3 below reports these impulse responses. What we find is exactly the pattern consistent with reverse causality.

. . .

Controlling for the previous year's GDP growth largely erases the negative relationship between debt-to-GDP ratio and GDP growth, especially for the range where debt is 30 percent or more of GDP. This is because a fall in GDP precedes the rise in Debt-to-GDP ratio. This is yet another demonstration that the simple bivariate negative correlation is driven in substantial part by reverse causality."

[gandoron]

I remember seeing this a few weeks back. The weighting is almost laughably bad. Pretty disturbing that this made it so far with effectively zero peer review.

-Graham

[FunkySwerve]

Yup. I deliberately avoided the two, maybe three obligatory scathing rants about ideology over fact, peer review, and more.

Funky