Failed Rescue Attempt of Reinhart-Rogoff
|Wednesday, 01 May 2013 09:59|
In a Bloomberg column, Matthew Klein gives a brief discussion of errors in New Zealand GDP numbers that he claims supports Reinhart-Rogoff over their critics at the University of Massachusetts, Thomas Herndon, Michael Ash, and Robert Pollin (HAP). However the numbers he gives do not support his case.
He claims that the UMass trio relied on mistaken numbers from the Maddison Project, which is generally taken as an authoritative source on GDP. However, Klein claims that the data given for New Zealand for the years in question is mistaken. After quoting from the UMass paper he tells readers:
"That sounds pretty damning but it turns out that on the New Zealand question, at least, it's Reinhart and Rogoff who are right, and Herndon, Ash and Pollin are wrong."
Klein refers us to data from Statistics New Zealand for 1946-1950, the five years in question:
"According to Statistics New Zealand, the economy grew by 3.0 percent in 1946, 0.4 percent in 1947, and 3.2 percent in 1948. New Zealand's GDP shrunk by 5 percent in 1949 and then grew by 5 percent in 1950."
Let's see that comes to an average growth rate for these five years of 1.32 percent. This is somewhat less than the 2.58 percent average that HAP got using the Maddison Project data, but Klein's number is far closer to the HAP average than the -7.9 percent growth figure for New Zealand that Reinhart and Rogoff used in their calculations.
It's not clear how this shows Reinhart and Rogoff are right about New Zealand and Herndon, Ash, and Pollin are wrong.
I just checked with Michael Ash and he confirmed that the data in their paper all came from the Reinhart-Rogoff spreadsheet. Insofar as this data is wrong, the fault lies with Reinhart and Rogoff, not Herndon, Ash, and Pollin.