Growth in a Time of Debt (Reinhart and Rogoff)

Alvaro Manoel recommends an interesting paper, Growth in a Time of Debt, by Carmen Reinhart and Kenneth Rogoff. They study economic growth and inflation at differente levels of government and external debt, based on new data on 44 countries spanning about 200 years. Some main findings are: “the relationship between government debt and real GDP growth is weak for debt/GDP ratis below threshold of 90% of GDP… We find that the threshold of public debt is similar in advanced and emerging economies…. There is no apparent contemporaneous link between inflation and public debt levels for the advanced countris as a group… the story is entirely different for emerging markets, where inflation rises sharply as debt increases.”