How The Famous Grad Student Project That Shook The Austerity Movement Almost Never Even Got Started


By now you should know the name Thomas Herndon.

He’s the UMass Amherst PHD student who discovered an Excel coding flaw in the famous paper by economists Kenneth Rogoff and Carmen Reinhart, which had claimed that when a country’s debt surpasses 90% of GDP, then growth slows precipitously.

Herndon’s discovery has ricocheted around the world, toppling one of the intellectual pillars of the austerity movement. Last night he was a guest on The Colbert Show.

But the paper might never have happened.

Herndon made the discovery while taking a course simply titled Econ 753: Applied Econometrics.

One of the big assignments for the course was a “replication exercise” where the student has to replicate the findings of a famous paper.

Here’s how the assignment is laid out in the course syllabus, which was kindly sent to us by Herndon’s professor (and paper co-author) Robert Pollin.

Click the image to enlarge

econometrics sylabus

Herndon decided for his project he would attempt to replicate the Reinhart-Rogoff findings, that growth for countries with 90% debt-to-GDP was so bad.

But his professors almost didn’t let him take on the project!

Why? Because the actual project of taking a bunch of countries and their growth rates in in various years, and averaging them together is very simple mathematics. It doesn’t seem like PHD calibre work.

Professor Pollin told us via email: “The techniques in Reinhart-Rogoff are extremely simple, nothing high-tech at all.  So the question between we professors was: would we be asking Thomas to do something sufficiently challenging if he were only to replicate this very simple paper?”

Pollin adds, “After some back and forth between us, the answer we settled on was obviously “yes.”  The rest is history.”

Even there it wasn’t inevitable. Herndon only discovered the glitch because he got Carmen Reinhart to send him the spreadsheet they used.

But because the original idea of just replicating their work was so simple, the project almost never even got started.