While a passionate debate about the Federal Reserve’s alleged spending spree continues below—the longest back and forth on an off-topic point in the history of this blog—the story about Ken Rogoff and Carmen Reinhart’s bad math continues to fascinate—and provoke debate.

In brief: The work of the two economists, including their book This Time Is Different, has become the ideological underpinning of the austerity movement that has dominated European fiscal policy in the Crisis and buttresses the budget-cutting forces here in the US.

Only…it’s apparently fundamentally wrong.

The mistakes are in a paper Rogoff and Reinhart published in 2010 called “Growth in a Time of Debt.”* Here is the summation of the argument against it. And here is a solid NYT overview.

This from the Times:

The new paper, released this week, has set off a storm within the economics profession, with some commentators even arguing that it undermines the austerity policies that have proved so prevalent in the last few years.

“How much unemployment was caused by Reinhart and Rogoff’s arithmetic mistake?” asked Dean Baker of the left-leaning Center for Economic and Policy Research, for instance.

That’s actually not an unreasonable question to consider. I’d argue that the authors erred in good faith and there was plenty of contradictory evidence on the part of competing economists to show that deficits, not austerity, fuel growth during recessions. So…blame the policymakers, especially the conservatives, who argue for budget-cutting for ideological reasons and use economics papers to justify cutting social service programs.

But still…the question’s useful because it gets at how influential the work of economists can be, and, well, how wrong.

Rogoff and Reinhart have circled the wagons, of course—too much reputation and too many speaking/consulting fees at stake.

(In the wake of the documentary Inside Job, some—not very many—Harvard economists began disclosing what compensated work outside of Harvard they performed. So far as I can tell, Rogoff is not one of them.)

But perhaps they shouldn’t be so quick to defend themselves; they really might want to consider how many people lost their jobs because of some bad arithmetic.

* And Paul Krugman reminds me that the book and the paper are very different things.

The book had a sound empirical strategy: it focused only on extreme events, then described what happened around those events. Because of the severity of the shock, it was reasonable to infer that whatever happened around crises was in fact crisis-related, so problems of causation were sidestepped.

The paper didn’t do any of that — it just looked at simple correlations, without making any effort to untangle causation. It wasn’t worthy of the authors.