Reinhart, Carmen and Rogoff, Kenneth (2010): Debt and Growth Revisited.
Download (97kB) | Preview
In a recent paper, we studied economic growth and inflation at different levels of government and external debt. The public discussion of our empirical strategy and results has been somewhat muddled. Here, we attempt to clarify matters, particularly with respect sample coverage (our evidence encompasses forty-four countries over two centuries--not just the United States), debt-growth causality (our book emphasizes the bi-directional nature of the relationship), as well as nonlinearities in the debt-growth connection and thresholds evident in the data (absolutely central points that seem to have been lost in some commentary.) In addition to clarifying the earlier results, this paper enriches our original analysis by providing further discussion of the high debt (over 90 percent of GDP) episodes and their incidence. Some of the implications of our analysis, including for the United States, are taken up in the final section.
|Item Type:||MPRA Paper|
|Original Title:||Debt and Growth Revisited|
|Keywords:||debt, growth, crisis, advanced economies, historical|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy
F - International Economics > F3 - International Finance > F30 - General
N - Economic History > N2 - Financial Markets and Institutions > N20 - General, International, or Comparative
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy
|Depositing User:||Carmen Reinhart|
|Date Deposited:||12. Aug 2010 10:01|
|Last Modified:||20. Jan 2015 10:24|
Bruno, Michael and William Easterly (1998), “Inflation Crises and Long-Run Growth,” Journal of Monetary Economics vol. 41, No. 1, February, 3-26.
Kaminsky, Graciela, and Carmen M. Reinhart (1999). “The Twin Crisis: The Causes of Banking and Balance of Payments Problems,” American Economic Review, Vol. 89 No. 3, June, 473-500.
Kumar, Mohan, and Jaejoon Woo (2010). “Public Debt and Growth,” IMF Working Paper WP/10/174 (July).
Iron, John S. and Josh Bivens (2010). “Government Debt and Economic Growth,” Economic Policy Institute Briefing Paper 271, July.
Krugman, Paul (1979), “A Model of Balance of Payments Crisis” Journal of Money Credit and Banking, Vol. 11, No. 3 August, 311-325.
Laeven, Luc and Fabian Valencia, (2010) “Resolution of Banking Crises: The Good, the Bad, and the Ugly,” IMF Working Paper 10/46 (June).
Reinhart, Carmen M. and Vincent R. Reinhart (2008), “Is the U.S. Too Big to Fail?” VoxEU, May 2010.
Reinhart, Carmen M., and Kenneth S. Rogoff, The Time is Different: Eight Centuries of Financial Folly. Princeton University Press, October 2009.
Reinhart, Carmen M., and Kenneth S. Rogoff (2010a), “Growth in a Time of Debt” American Economic Review, (May 2010). Revised from NBER working paper 15639, January 2010.
Reinhart, Carmen M., and Kenneth S. Rogoff (2010b), “From Financial Crash to Debt Crisis,” NBER Working Paper 15795, March. Forthcoming in American Economic Review. Reinhart, Carmen M., Miguel A. Savastano and Kenneth S. Rogoff, "Debt Intolerance", in William Brainard and George Perry (eds.), Brookings Papers on Economic Activity 1: 2003, 1-74. An earlier version appeared as NBER Working Paper 9908, August 2003.