For years now, the public debate over governmental spending and governmental debt, which has led to the truly bizarre situation of a Democratic U.S. President proposing to cut Social Security and Medicare, has been heavily influenced by a 2010 study by two eminent economists, Reinhart and Rogoff. The R/R study claimed to show, by rigorous analysis of the historical record, that countries with high government debt levels (above 90% of GDP, I think was the number) had very low economic growth--actually, economic growth of -0.1%, so not growth at all, but contraction. This paper was used to argue that the correct response to the economic crisis of recent years was not stimulus spending, as per Keynes and much of standard textbook economics, because stimulus spending that increased debt levels too high would not be stimulative, but contractionary. Instead of doing stimulus spending, governments were supposed to respond to the deep recession by... well, at any rate by doing something else (all too often education reform was dragged into the debate).
Now, with the publication of a paper by UMass researchers, it turns out that the Reinhart/Rogoff study was flawed, partly due to massaging the data in unconventional ways (picking and choosing, and weighting it weirdly), and partly--get this--due to a typo in the excel spreadsheet they used to work with their data. The typo (44 instead of 49) led to the exclusion several key countries. Mike Konczal covers it here, but the key result is that if you handle the data normally and don't have the typo, countries with 90% debt/GDP ratios actually had average economic growth of 2.2%, not -0.1%. 2.2% is not great, but it's not negative, and it destroys the argument that most mainstream economists and pundits have been using to argue for cuts in government spending.
This is really remarkable news for anyone who's been following the public economics discourse recently. The Reinhart/Rogoff study has been cited more than anything else in the debates these past few years over government spending (for example, just last week Paul Ryan's response to Obama's budget was entirely based on the R/R study) by people who needed an apparent scientific basis for cuts in government spending like those that have brought England back into recession and Europe to the first stages of dissolution, and yet the study seems to have been simply shoddy and wrong.
What to take away from this? One, we can usually trust Dean Baker and Paul Krugman. Two, it behooves us to be modest, compassionate and natural, and to beware of dodgy dossiers.