Weekly Wrap

Excel errors and a new Simpson-Bowles report

Kai Ryssdal Apr 19, 2013
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Weekly Wrap

Excel errors and a new Simpson-Bowles report

Kai Ryssdal Apr 19, 2013
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Better double-check your Excel spreadsheets. This week, two Harvard economists, Ken Rogoff and Carmen Reinhart, admitted they had made a mistake in the Microsoft Excel spreadsheet they used in their report on GDP and growth.

The original report said that when a country owes more than 90 percent of their GDP, it slides into recession. It had been used in budget policy decisions in the U.S. as a reason for reducing government spending.

The economists responded by saying that other studies support the overall research and results. Could this change the U.S.’s budget policies in the future?

“Look, debt is still a problem. I don’t think anybody would disagree with that,” said Fortune magazine’s Leigh Gallagher. “You can see the ‘Saturday Night Live’ skit being written…you have to note the irony. It’s like when I go to my hairdresser — I don’t know how to do what he does, but I do expect him to cut it evenly, you know?”

“It’s actually even more basic than that,” Reuters’ Felix Salmon countered. “If you can’t literally just add up a row of numbers in an Excel spreadsheet? And the other thing is that people really took this 90 percent number to heart.

“If there’s one thing that everyone in the world knows about Reinhart and Rogoff, it’s that 90 percent is really dangerous; after this level you go into this kind of red zone. And it turns out, even if things become worse, gradually, slowly as you get more debt, there’s nothing special about 90 percent.”

Listen to the full audio for additional analysis and more on the new Simpson-Bowles deficit reduction plan.

#Longreads

The Wrappers offer their weekend #longreads picks.

Felix Salmon suggests:

Leigh Gallagher picks:

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