Title says it most of it. Details at link.
Prime
From Reinhart & Rogoff's own data: UK GDP increased fastest when debt-to-GDP ratio was highest - and the debt ratio came down!
Jeremy Smith
Same with US in the run-up of the national debt during WWII and unleashing of pent up demand in the aftermath.
1 comment:
Smith:
"For the 16 years from 1949 to 1964 when UK debt as a percentage of GDP was over 90%, annual GDP grew on average by 3.29%
"For the 7 years from 1965-70 and in 2010, when UK debt as a percentage of GDP was from 60 o 90%, GDP grew on average by 2.73%
"For the 40 years from 1971 to 2009 and 2011, when debt as a percentage of GDP was under 60%, GDP grew on average by 2.43%"
Qualitatively Smith is right, but the growth figures are too high, because he takes the arithmetic mean instead of the geometric mean. :(
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