Accurate and Inaccurate Ways of Portraying the Debt-and-Growth Association
Noted for May 27, 2013

Martin Wolf's Point About the British Industrial Revolution, Debt, and Growth...

Ah. I missed this at the time. Josh Bivens wrote:

A slight bit of substance on the Reinhart and Rogoff 90 percent debt threshold: A statistical association of high debt ratios with slow growth could well be (in fact is more likely to be) driven by causality that runs from slow growth to high debt ratios, and the not the reverse causality that R&R strongly argue. In an interview with Dylan Matthews, Reinhart dismissed this:

Reinhart dismisses these criticisms as wishful thinking. ‘We’re quite aware that you have causality going in both directions,’ she says. ‘But please point out to me what episodes from 1800 to the present have we had advanced economies who carried high levels of debt growing as rapidly or more rapidly than the norm.’

Answer: Britain after 1815. Debt of 240% of a year's GDP. Economic growth unprecedented both in earlier ages and in comparison with every place else in the world…