July 04, 2010
The NYT devoted a long story to touting the work of Ken Rogoff and Carmen Reinhart on financial crises. At one point the article comments that:
“Although their book is studiously nonideological, and is more focused on patterns than on policy recommendations, it has become fodder for the highly charged debate over the recent growth in government debt.”
Actually, much of the fodder for the public debate has been over a separate paper that claims that economies perform more poorly once their debt to GDP ratio exceeds 90 percent. Mr Rogoff and Ms. Reinhart have declined to adhere to standard ethics within the economics profession and have refused to share the data on which they base their conclusion with other researchers.
Later, the article asserts that:
“In the years before and during Mr. Rogoff’s tenure [as chied economist with the IMF], critics including the prominent economist Joseph Stiglitz accused the I.M.F. of having a cold-hearted, doctrinaire approach to its work in poorer countries. Some of that criticism still clings to Mr. Rogoff. For his part, he contends that the I.M.F. did what it could for countries with intractable problems, and that the critics’ approaches would have made troubled economies even weaker.”
Mr. Rogoff’s critics did not just accuse him of being cold-hearted. During his tenure at the IMF, Argentina went from being an IMF poster child to being an outlaw when it defaulted on its debt in December of 2001. In the years prior to its default, the IMF consistently erred on the high side in its projections of growth for Argentina. In the years after it defaulted the IMF’s projections consistently underestimated Argentina’s growth by large amounts. It would be almost impossible to produce this pattern of errors if the IMF was not using political criteria in its growth projections for Argentina.
