Can he save R-R, can Hamilton revive R-R's standing among his peers? Actually I think that after reading his latest, Hamilton should worry about his own reputation. Sumner wrote a post where he tried to piggyback off of Hamilton's apologetics:
"I’ve stayed out of the R&R kerfuffle. This is partly because I haven’t read their paper, partly because James Hamilton points out that the mistakes were fairly minor, and partly because Matt Yglesias points out that the real issue is causality, which R&R’s study doesn’t resolve."
http://www.themoneyillusion.com/?p=20912#comment-245269
Oh, so it was minor. Sumner then spends most of this post discussing other aspects of R-R; clearly he doesn't spend much time on this minor error. The commentator, Patrick Sullivan is certain that Hamilton provides the smoking gun for R-R and relentlessly chides me with it:
‘Patrick why am I pigeonholed into only being allowed to discuss this one facet of Henderson’s piece?"
‘If you want me to discuss the excel error and just how big or small it is fine.’
"Do you suppose that’s why I asked you, ‘So Mike, is Hamilton wrong about that?’?
"And why did you not answer me, but instead pose as a martyr? When you finally get around to saying something about what Hamilton actually did write about the Excel error (in a later post!), all you can offer is;
"Which is false, as Hamilton clearly said they’d made a ‘numbskull error’
‘Despite all the many words Hamilton expended on it at the end of the day it was a material difference.’
‘…it turns out it [the error] would only have changed the estimate they reported by a few tenths of a percent.’
So, the dispute between you and Hamilton is whether ‘a few tenths of a percent’ is, or is not, ‘a material difference’.
"When I see someone go to the lengths you have gone to cover up this, I’m pretty sure that person knows he’s skating on thin ice."
"So how does any of that cause us to discount or dismiss the contributions of This Time Is Different? You tell me."
http://www.econbrowser.com/archives/2013/04/the_contributio.html
So this is the quality of work that will save R-R's reputation? Maybe Hamilton should think about his own.
To claim that the error is a "tiny detail" totally whitewashes what R-R did. To say it just altered one statistic by a few tenths of a percent is just playing an intellectual shell game. This is about much more than a rounding error. I notice that both R-R and their apologists claim that the 90% number doesn't matter. Yet that's not what they were saying when this number was being trumpeted in both Congress and the EU.
http://qz.com/76447/an-economists-mea-culpa-i-relied-on-rogoff-and-reinhart/
In the next post-yeah this is like Batman now-I'll look a bit more at the why Hamilton is claiming this is just a rounding error. What we'll find is that he calls a rounding error differs from what other people might.
"I’ve stayed out of the R&R kerfuffle. This is partly because I haven’t read their paper, partly because James Hamilton points out that the mistakes were fairly minor, and partly because Matt Yglesias points out that the real issue is causality, which R&R’s study doesn’t resolve."
http://www.themoneyillusion.com/?p=20912#comment-245269
Oh, so it was minor. Sumner then spends most of this post discussing other aspects of R-R; clearly he doesn't spend much time on this minor error. The commentator, Patrick Sullivan is certain that Hamilton provides the smoking gun for R-R and relentlessly chides me with it:
‘Patrick why am I pigeonholed into only being allowed to discuss this one facet of Henderson’s piece?"
You can discuss anything you like, but when you make a blatantly false statement like; ‘This 90% rule was all compliments of an Excel error.’, you’re asking to be corrected.
‘If you want me to discuss the excel error and just how big or small it is fine.’
"Do you suppose that’s why I asked you, ‘So Mike, is Hamilton wrong about that?’?
"And why did you not answer me, but instead pose as a martyr? When you finally get around to saying something about what Hamilton actually did write about the Excel error (in a later post!), all you can offer is;
‘As far as the Excel error basically Hamilton is trying to say that R-R are basically blameless.’
"Which is false, as Hamilton clearly said they’d made a ‘numbskull error’
‘Despite all the many words Hamilton expended on it at the end of the day it was a material difference.’
And ‘the many words Hamilton expended’ were;
‘…it turns out it [the error] would only have changed the estimate they reported by a few tenths of a percent.’
So, the dispute between you and Hamilton is whether ‘a few tenths of a percent’ is, or is not, ‘a material difference’.
"When I see someone go to the lengths you have gone to cover up this, I’m pretty sure that person knows he’s skating on thin ice."
Now see, using words like blatantly false is a serious charge. Yet what gets me is that Sullivan is totally sidestepping my point. I mean he's running with Hamilton's claim that R&R's error was little more than a rounding error. Yet what about the blatant false statement that Hamilton makes? And this untruth is not minor, as Tom Brown observes it's 90% of this post, the title is about it: The contributions of R-R.
He then goes on to tell us all about that book they wrote in 2009 called This Time It's Different. Which is fine: it was a great book. They were dead on: financial recessions last longer. Ironically, however, while Sumner praises Hamilton, 90% of this post is about the book that makes this point and Sumner doesn't much like the point. He is one of the few who doesn't love the insight that financial recessions are longer:
"While I’ve ignored the R&R study on public debt, I’ve had issues with their claim that financial crises tend to be followed by slow recoveries. That’s probably true, but we need to be careful before assuming any causal relationship. I’m inclined to think that most financial crises are caused by a sharp drop in expected GDP growth. If the shock is nominal, as in the US in 1930s and in Argentina in the 1998-2001 period, then monetary stimulus can trigger fast RGDP growth. If the shock is real (say Indonesia in 1998), then a slow recovery is almost inevitable. Expectations of slow NGDP growth can easily trigger a financial crisis, so causation can go in either direction. Indeed the EMH implies that a sharp fall in asset prices will accompany the early stages of a deep and prolonged and unexpected slump in GDP growth. Unfortunately, the R&R study led to excessive pessimism about the prospects for monetary stimulus leading to a fast US recovery, and many pundits missed the fact that our case was more like the US in 1933 and Argentina in 2001, than Indonesia in 1998."
So while Patrick wants to discuss the "minor error" that he thinks exonerates R-R, this is not what the Hamilton post is mostly about. At the end Hamilton gives it cursory notice:
"To briefly summarize the facts that you'll find developed more fully there, some researchers at the University of Massachusetts have challenged one tiny detail of one follow-up study by Reinhart and Rogoff having to do with an issue that I have yet to even mention so far in today's discussion. That dispute concerns a measure of the correlation between sovereign debt levels and GDP growth. I say it is a tiny detail, because the dispute is completely restricted to just one of six different summaries of three different data sets in that one particular paper. The Massachusetts researchers correctly noted that there is an error in the spreadsheet which, if corrected, would have changed the number Reinhart and Rogoff should have reported for that one statistic by a few tenths of a percent. Bigger changes in that one statistic could be obtained if one adds some additional data and makes what I regard as a questionable change in methodology, but even with all the changes they want to make, the results preferred by the University of Massachusetts researchers are in fact very similar to the other 5 dataset summaries that will be found in Reinhart and Rogoff's original paper, as well as a subsequent analysis of expanded data that Reinhart and Rogoff published in 2012 (which again the Massachusetts scholars did not mention or discuss)."
"So how does any of that cause us to discount or dismiss the contributions of This Time Is Different? You tell me."
http://www.econbrowser.com/archives/2013/04/the_contributio.html
So this is the quality of work that will save R-R's reputation? Maybe Hamilton should think about his own.
To claim that the error is a "tiny detail" totally whitewashes what R-R did. To say it just altered one statistic by a few tenths of a percent is just playing an intellectual shell game. This is about much more than a rounding error. I notice that both R-R and their apologists claim that the 90% number doesn't matter. Yet that's not what they were saying when this number was being trumpeted in both Congress and the EU.
http://qz.com/76447/an-economists-mea-culpa-i-relied-on-rogoff-and-reinhart/
In the next post-yeah this is like Batman now-I'll look a bit more at the why Hamilton is claiming this is just a rounding error. What we'll find is that he calls a rounding error differs from what other people might.
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