Head of Touchstone Business IntelligenceMore
Reinhart and Rogoff’s 2010 influential study to identify a critical a “tipping point” for government debt where growth drops off sharply was relied upon to guide policy by the US government to bolster arguments for austerity cuts.
Unfortunately it contained significant errors; and that those errors came down to misuse of an Excel spreadsheet.
Using Microsoft Excel their spreadsheet calculated that that countries with a debt-to-GDP ratio of 90% or higher see average growth of minus 0.1%
However, they failed to include Denmark, Canada, Belgium, Austria, and Australia. Which would have made the growth rate 2.2%!
(for more information on Reinhart and Rogoff’s 2010 influential study see here)
Examples like these are endless and I know I sound like a broken record but there is a better way!
"Excel was always meant for people mucking around with a bunch of data for their small company to see what it looked like," commented Professor Jon Crowcroft from the University of Cambridge.
"And then when you need to do something more serious, you build something bespoke that works - there's dozens of other things you could do.
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