I work in extremely complex financial models all day and this “error check” in this article is weak at best. Plenty of ways to double check and validate formulas. A minor step up is using conditional formatting to highlight when numbers, using two different methods of calculation, don’t match.
That being said this was a major f**k up by these guys. This study was used by numerous people (including Paul Ryan) to push “austerity” as a way to avoid way below average growth. Turns out the “way below average” growth wasn’t so much. Not to say that 90+% debt/GDP is a good thing but it’s just not as bad as this study showed thanks to this basic Excel error.
The Rogoff-Reinhart line is sound, and their underlying work masterful. While “corrections” of some data reverses their findings, this is almost always the case in economics. If you cherry-pick the data to be corrected, you can reverse the findings of many studies.
There are some real problems with using “official” data on deficits and debts, as these are developed under different definitions of deficits and debts across countries and across time.
For example, the U.S. counts Treasury debt held by the Federal Reserve as a part of the public debt (and it counts remittances from the Fed to the Treasury as part of income). This reflects the legal distinction of the Fed from the government; but, my goodness, is this legal distincton real?
Accountants concern themselves with these kinds of things when considering corporate treatment of “off-balance sheet” items, and we need to do the same with respect to accounting for the deficits and debts. This is not to question the legitimacy of any of the definitions of deficits and debts that are out there, but we need to re-state official statistics on a consistent basis to conduct a study that spans centuries of time and practically the entire world of countries.