This is a lecture on debt and its relation to economic growth. Please follow the following link out to the lecture. Yes, this is a reading a assignment.
Yes there is a fresh carafe of Ethopian Yrgacheffe with fresh croissants and preserves right over there to munch on while you read. —->
An Excerpt:
At what point does indebtedness become a problem? In our study “Growth in a Time of Debt,” we found relatively little association between public liabilities and growth for debt levels of less than 90 percent of GDP. But burdens above 90 percent are associated with 1 percent lower median growth. Our results are based on a data set of public debt covering 44 countries for up to 200 years. The annual data set incorporates more than 3,700 observations spanning a wide range of political and historical circumstances, legal structures and monetary regimes.
We aren’t suggesting there is a bright red line at 90 percent; our results don’t imply that 89 percent is a safe debt level, or that 91 percent is necessarily catastrophic. Anyone familiar with doing empirical research understands that vulnerability to crises and anemic growth seldom depends on a single factor such as public debt. However, our study of crises shows that public obligations are often hidden and significantly larger than official figures suggest.
(Carmen M. Reinhart is a senior fellow at the Peterson Institute for International Economics in Washington. Kenneth S. Rogoff is a professor of economics at Harvard University. They are co-authors of “This Time is Different: Eight Centuries of Financial Folly.” The opinions expressed are their own.)
