Dangerous Debt
05/07/2013 | | 90%, debt limits, Elliot eisenberg, Graphsandlaughs, graphsandlaughs and elliot eisenberg, Reinhart and rogoff
The take-away message from the Reinhart-Rogoff error is that research mistakes happen, that higher debt levels are correlated with slower GDP growth, and that there is no debt threshold, 90% or otherwise, above which growth dramatically collapses. Rather, as the debt/GDP ratio rises, growth rates systematically decline. The key unanswered question of the research is do higher debt levels reduce growth, or does slow growth cause higher debt levels?