IDEAS home Printed from https://ideas.repec.org/p/uma/periwp/wp322.html
   My bibliography  Save this paper

Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogo ff

Author

Listed:
  • Thomas Herndon
  • Michael Ash
  • Robert Pollin

Abstract

Herndon, Ash and Pollin replicate Reinhart and Rogoff and find that coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth among 20 advanced economies in the post-war period. They find that when properly calculated, the average real GDP growth rate for countries carrying a public-debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0:1 percent as published in Reinhart and Rogo ff. That is, contrary to RR, average GDP growth at public debt/GDP ratios over 90 percent is not dramatically different than when debt/GDP ratios are lower.The authors also show how the relationship between public debt and GDP growth varies significantly by time period and country. Overall, the evidence we review contradicts Reinhart and Rogoff 's claim to have identified an important stylized fact, that public debt loads greater than 90 percent of GDP consistently reduce GDP growth.Media requests: please contact Debbie Zeidenberg. >> Download the paper here1,2>> "Debt and Growth: A Response to Reinhart and Rogoff" in The New York Times, April 29, 2013>> Supplemental Technical Critique of Reinhart and Rogoff's "Growth in a Time of Debt">> Robert Pollin and Michael Ash's op ed in the Financial Times>> Data and code files upon which the results are based >> Text document describing the files in the code and data archive>> Concordance between variable names in the RR working spreadsheet and the HAP data and code>> Additional spreadsheet with the following columns: country; year; public debt/GDP ratio; public debt/GDP category; real GDP growth. Columns are calculated from data and formulas in the Reinhart and Rogoff working spreadsheet and can be used, e.g., with pivot tables, to replicate the results in RR 2010 and HAP. >> Updated and more complete data and code package (as of May 17, 2013), as referenced in "Debt and Growth: A Response to Reinhart and Rogoff" in The New York Times, April 29, 2013. Code and data are open-source under the BSD 2-clause license (http://www.tldrlegal.com/l/BSD2). Documentation is here. >> A sample of the media coverage of the study1 The paper was updated at 1:35 pm on April 17, with the following corrections: (1) The notes to Table 3: "Spreadsheet refers to the spreadsheet error that excluded Australia, Austria, Canada, and Denmark from the analysis." is corrected to read: "Spreadsheet refers to the spreadsheet error that excluded Australia, Austria, Belgium, Canada, and Denmark from the analysis." (2) Page 13: “Thus, in the highest, above-90-percent public debt/GDP, GDP growth of 4.1 percent per year in the 1950-2009 sample declines to only 2.5 percent per year in the 1980-2009 sample” is corrected to read "Thus, in the lowest, 0–30-percent public debt/GDP, GDP growth of 4.1 percent per year in the 1950–2009 sample declines to only 2.5 percent per year in the 1980–2009 sample." 2 The paper was updated at 9:36 am on April 22, with the following changes: (1) Table 3 has been expanded to show the effect of each of the errors in RR (spreadsheet error, selective year exclusion, and country weighting) separately and the effect of all interactions of the errors. Text in the section "Summary: years, spreadsheet, weighting, and transcription" (p.10) has been updated to describe the expanded table. No results have changed. (2) On p. 5, the text: "Outside the US, the series for some countries do not begin until 1957 and that for Italy is unavailable before 1980. Eight countries are available from 1946, sixteen from 1950, and all countries but Italy and Greece enter the dataset by 1957," has been changed to: "Outside the US, the series for some countries do not begin until the 1950’s and that for Greece is unavailable before 1970. Nine countries are available from 1946, seventeen from 1951, and all countries but Greece enter the dataset by 1957," and the text "real GDP growth is unavailable for Spain for 1959–1980" has been added.

Suggested Citation

  • Thomas Herndon & Michael Ash & Robert Pollin, 2013. "Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogo ff," Working Papers wp322, Political Economy Research Institute, University of Massachusetts at Amherst.
  • Handle: RePEc:uma:periwp:wp322
    as

    Download full text from publisher

    File URL: https://per.umass.edu/fileadmin/pdf/working_papers/working_papers_301-350/WP322.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "A Decade of Debt," Central Banking, Analysis, and Economic Policies Book Series, in: Miguel Fuentes D. & Claudio E. Raddatz & Carmen M. Reinhart (ed.),Capital Mobility and Monetary Policy, edition 1, volume 18, chapter 4, pages 97-135, Central Bank of Chile.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael Reddell, 2012. "The New Zealand Debt Conversion Act 1933: a case study in coercive domestic public debt restructuring," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 75, pages 38-45, March.
    2. László Domokos, 2011. "Credibility and Flexibility.Changes in the Framework of Hungarian Public Finances," Public Finance Quarterly, State Audit Office of Hungary, vol. 56(3), pages 291-302.
    3. Andreea Stoian & Filip Iorgulescu, 2016. "The study of public debt: which are the distinctions between the emerging and advanced economies in the European Union?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(1), pages 167-196, February.
    4. Francesco Passarelli & Guido Tabellini, 2017. "Emotions and Political Unrest," Journal of Political Economy, University of Chicago Press, vol. 125(3), pages 903-946.
    5. Hileman, Garrick, 2012. "The seven mechanisms for achieving sovereign debt sustainability," Economic History Working Papers 42878, London School of Economics and Political Science, Department of Economic History.
    6. Alexandru Minea & Patrick Villieu, 2010. "Dette publique, croissance et bien-être : une perspective de long terme," Post-Print halshs-00672605, HAL.
    7. Zsolt Darvas & Jean Pisani-Ferry, 2011. "Europe's growth emergency," Policy Contributions 623, Bruegel.
    8. Dumitriu, Ramona & Stefanescu, Razvan, 2013. "External debt management in Romania," MPRA Paper 52475, University Library of Munich, Germany, revised 25 Sep 2013.
    9. Fritz Breuss, 2012. "Towards a New EMU," WIFO Working Papers 447, WIFO.
    10. Beirne, John & Fratzscher, Marcel, 2013. "The pricing of sovereign risk and contagion during the European sovereign debt crisis," Journal of International Money and Finance, Elsevier, vol. 34(C), pages 60-82.
    11. Polito, Vito & Wickens, Mike, 2014. "Modelling the U.S. sovereign credit rating," Journal of Banking & Finance, Elsevier, vol. 46(C), pages 202-218.
    12. Javier Bianchi & Juan Carlos Hatchondo & Leonardo Martinez, 2018. "International Reserves and Rollover Risk," American Economic Review, American Economic Association, vol. 108(9), pages 2629-2670, September.
    13. Jean-Pierre Allegret, 2015. "6. Quelles sont les causes et les conséquences d’un défaut sur la dette publique ?," Regards croisés sur l'économie, La Découverte, vol. 0(2), pages 101-116.
    14. Stein, Julian Alexander Cornelius & Braun, Dieter, 2019. "Stability of a time-homogeneous system of money and antimoney in an agent-based random economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 520(C), pages 232-249.
    15. De Vita, Glauco & Trachanas, Emmanouil & Luo, Yun, 2018. "Revisiting the bi-directional causality between debt and growth: Evidence from linear and nonlinear tests," Journal of International Money and Finance, Elsevier, vol. 83(C), pages 55-74.
    16. Susan Lund & Charles Roxburgh, 2010. "Debt and Deleveraging," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 11(2), pages 1-30, April.
    17. Xing, Xiaoyun & Xiong, Wanting & Chen, Liujun & Chen, Jiawei & Wang, Yougui & Stanley, H. Eugene, 2018. "Money circulation and debt circulation: A restatement of quantity theory of money," Economics Discussion Papers 2018-1, Kiel Institute for the World Economy (IfW Kiel).
    18. Bitar, Nicholas & Chakrabarti, Avik & Zeaiter, Hussein, 2018. "Were Reinhart and Rogoff right?," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 614-620.
    19. Ben Ltaief, Leila, 2014. "Dette publique et croissance économique : investigation empirique pour la zone euro, l’Union européenne et les pays avancés," L'Actualité Economique, Société Canadienne de Science Economique, vol. 90(2), pages 79-103, Juin.
    20. Carmen M. Reinhart, 2011. "A Series of Unfortunate Events: Common Sequencing Patterns in Financial Crises," 'Angelo Costa' Lectures Serie, SIPI Spa, issue Lect. XII.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uma:periwp:wp322. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/permaus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Judy Fogg The email address of this maintainer does not seem to be valid anymore. Please ask Judy Fogg to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/permaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.