That isn't true. This paper indicated that moderately high levels of public debt constrained economic growth. As you have pointed out, the paper was riddled with errors and the evidence that moderately high levels of public debt slow economic growth isn't really there.

What happened in Greece is quite different. Lenders lost confidence in the Greek government's ability to repay their debt. Partially because there was re-statement of public debt that increased the debt level by 11% overnight.

What the Greek government did after that to get out from under this was to cut spending (austerity). Economists have always been sceptical that this would work since during a recession is the very worst time to cut spending since it reduces cumulative demand at a time when it is already down.

Indeed it did not work as we all know, but Eurozone lenders were not willing to allow a partial default which is what should have happened and being in the Euro means that there is no possibility for a devaluation.

Investors understood the rescue of Greece exactly like that anyway if you ask me. But maybe the EU had to maintain the public impression of austerity. Or rather the Germans.

https://3gp11q1ujq964apmpt3s9cda-wpengine.netdna-ssl.com/wp-...

Spending on services has been drastically cut, but the country has been borrowing vastly more money. The only way I see that working is if taxes have plummeted (but taxes for ordinary folk have risen slightly if anything) or if the money is being syphoned off somewhere ... but we're talking GDP levels of cash here.

Anyone explain it to me?

Not really, the Authors of the spreadsheet made one or more errors, AND they did not double check results, NOR any of the top-level economists criticized the results.

In other words an entire country was (severely) punished because of a wrong theory (based on erroneous data) that all the establishment accepted because it came from Harvard.

The Reinhart and Rogoff paper was more like factoid of a theory - no complicated model, just a dubious claim that trips off the tongue - "Studies have shown that when debt reach X level, growth tanks"

The thing about this is when the shoddy quality of the study became obvious, people could act that was what drove all the horrible things coming under austerity, as if these weren't the consensus of a large group, study-or-not-study.

Still the main responsability sits on the economists and their peers.

I mean, not that I want in any way to absolve the politicians, mind you, but what can they do - not being economists or more generally technically experts in this or that field - if not choosing the theories from people qualified by notorious universities?

In my experience what matters in this is reputation (and network), which in itself is not "bad" in an absolute sense, but I see a lot of sloppy or downright "wrong" works (even if rarely with such severe consequences) coming from these people lately.

It seems to me like there are not (or not enough) critical reviews/checkings/etc. in some (scientific or pseudo-scientific) circles.

And people claim to wonder why Greece is friendly with China...

[1] A. Alesina, C. A. Favero, and F. Giavazzi, Austerity: when it works and when it doesnt. Princeton (New Jersey): Princeton University Press, 2019.

[2] C. D. Romer and D. H. Romer, “The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks,” American Economic Review, vol. 100, no. 3, pp. 763–801, 2010.

https://www.ft.com/content/01fc06b8-fb6e-3e36-acb0-a1f8b47a7...

It remains true that high debt ratios hamper growth.

[1] https://scholar.harvard.edu/files/rogoff/files/response_to_h...

[2] https://archive.md/2daXH