Is High Public Debt Always Harmful to Economic Growth? Reinhart and Rogoff and some complex nonlinearities
In their already-famous 2010 article “Growth-in-a-Time-of-Debt” ( AER -100(2)-pp.-573-78), Carmen Reinhart and Kenneth Rogoff show that average post-WW2 economic growth is dramatically declining in advanced economies, once the debt-to-GDP ratio is above a 90% threshold. We explore the relevance of this exogenous threshold using up-to-date econometric techniques, and reveal an endogenously-estimated threshold around a debt-to-GDP…