Economics @ ITT

Does High Public Debt Stifle Economic Growth?

Posted in economics, macroeconomics by ittecon on April 18, 2013

In capitals, both political and economic, across Europe, across North America, really, across the world, theres been an assumption based on a study done by two eminent Harvard professors, economists Carmen Reinhart and Kenneth Rogoff, which presented in 2010 their conclusions that 90 percent debt-to-GDP ratio means a collapse in growth. Its that conclusion that leads to policies like austerity, which says even in times of recession, debts more dangerous than high unemployment.

Now joining us to talk about their conclusions, because theyve reached quite different conclusions about the same data, is, from the PERI institute, first of all, Thomas Herndon. Hes a doctoral student in economics at the University of Massachusetts Amherst. His research includes political economy and finance. And he coauthored a paper: Does High Public Debt Consistently Stifle Economic Growth?, which is a critique of Reinhart and Rogoff.

via Does High Public Debt Stifle Economic Growth?.

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