|Alma mater||The Evergreen State College|
|Known for||Exposing fundamental errors in "Growth in a Time of Debt"|
|Notable work||Academic paper: Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff|
Thomas Herndon is an Assistant Professor of Economics at Loyola Marymount University, who, as a graduate student at the University of Massachusetts, became known for critiquing "Growth in a Time of Debt", a widely cited academic paper by Carmen Reinhart and Kenneth Rogoff supporting the austerity policies implemented by governments in Europe and North America in the early 21st century. His research concluded that these measures may not have been necessary.
Herndon proved the paper contained multiple errors, provoking widespread international interest and embarrassment for austerity policymakers. The Reinhart-Rogoff paper was frequently cited during the 2012 U.S. presidential election campaign. It was also frequently cited among policymakers in congress, including in the drafting of the Bowles-Simpson report. However, there are differing views on the actual impact the original paper may have had on policy making.
The findings have been described as "shocking" and as having rocked the economics world. Publications such as The Washington Post have for several years taken the conclusions of the Reinhart-Rogoff paper as an "economic consensus view." New York magazine wrote that Herndon "just used part of his spring semester to shake the intellectual foundation of the global austerity movement."
Discovery of flaws in Growth in a Time of Debt
During his graduate studies in a class with Professor Michael Ash, Herndon was assigned to pick an economics paper and try to replicate the results. He chose "Growth in a Time of Debt", and throughout the semester his attempts to replicate the results proved unsuccessful. After further consultation with his professors Michael Ash and Robert Pollin, Herndon was encouraged to contact the authors Reinhart and Rogoff at Harvard. They provided him with the actual working spreadsheet they had used to obtain their results. Herndon looked into the detail of the original spreadsheet and found several issues:
- The authors had accidentally only included 15 of the 20 countries under analysis in their key calculation (having excluded Australia, Austria, Belgium, Canada and Denmark);
- For some countries, some data was missing;
- The methodology to average out performance of countries of different sizes was called into question. For example, one bad year for New Zealand, was weighted equally with the United Kingdom, a major global economy with nearly 20 years of high public debt. Reinhart and Rogoff have defended the high weight given to New Zealand's economy in 1951, but even granting this point fully, grave doubts are still placed on the major Reinhart-Rogoff results.
The basic conclusion that countries with indebtedness rates above 90% of GDP have lower growth rates still held, but the most spectacular results disappeared, the relationship was much gentler and there were numerous exceptions to the rule. These results were published on 15 April 2013 as a draft working paper, and in 2014 in the peer-reviewed Cambridge Journal of Economics.
- Herndon, Thomas; Ash, Michael; Pollin, Robert (15 April 2013). "Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff" (PDF). Political Economy Research Institute – Working Paper Series (322). Archived from the original on 25 June 2013. Retrieved 25 June 2013.
- "Doubt cast on research supporting austerity". BBC News. 19 April 2013. Retrieved 19 April 2013.
The new research suggests that austerity measures may not have been necessary
- "How Thomas Herndon, a student, took on Harvard economists and won". IBN Live. 18 April 2013. Retrieved 18 April 2013.
- Alexander, Ruth (19 April 2013). "Reinhart, Rogoff... and Herndon: The student who caught out the profs of austerity". BBC News. Retrieved 19 April 2013.
- Evans, Pete (17 April 2013). "Key pro-austerity study based on incorrect math: Holes poked in analysis that claims high debt loads cause economies to shrink". CBC News. Retrieved 17 April 2013.
- Trotter, JK. "UMass Student Exposes Serious Flaws in Harvard Economists' Influential Study". The Atlantic Wire. Archived from the original on June 25, 2013. Retrieved June 25, 2013.
- Konczal, Mike (16 April 2013). "Shocking Paper Claims That Microsoft Excel Coding Error Is Behind The Reinhart-Rogoff Study On Debt". Businessinsider. Retrieved 16 April 2013.
- Parnass, Larry (18 April 2013). "UMass graduate student Thomas Herndon rocks economics world with class project on debt, growth". Gazettenet. Retrieved 18 April 2013.
- Roose, Kevin (18 April 2013). "Meet the 28-Year-Old Grad Student Who Just Shook the Global Austerity Movement". New York. Retrieved 18 April 2013.
- Alexander, Ruth (19 April 2013). "Reinhart, Rogoff... and Herndon: The student who caught out the profs". BBC News Magazine. Archived from the original on 25 June 2013. Retrieved 25 June 2013.
- "Reinhart, Rogoff Admit Excel Mistake, Rebut Other Critiques". Wall Street Journal. April 17, 2013. Archived from the original on June 25, 2013. Retrieved June 25, 2013.