Home' Policy Magazine : Policy Vol 29 - No 4 Contents 44 POLICY • Vol. 29 No. 4 • Summer 2013–2014
THE CONSEQUENCES OF HIGH GOVERNMENT DEBT: REINHART AND ROGOFF VERSUS PUNDITS
I’ll say it once more: Balancing the budget is
the only way that a large country has ever wound
down a 105% debt-to-GDP without haircutting
its creditors. Not for the frst time, the common
sense solution is the only approach that’s worked.
Note: For details on the credit events that
accompanied 52 of the 63 high debt episodes in
Table 1, see ‘Technical notes for 63 high
government debt episodes’ on Cyniconomics: www.
1 Carmen M. Reinhart and Kenneth S. Rogof, ‘Growth in
a Time of Debt,’ American Economic Review 100 (2010),
2 Carmen M. Reinhart, Vincent R. Reinhart, and Kenneth
S. Rogof, ‘Debt Overhangs: Past and Present,’ Journal of
Economic Perspectives (forthcoming).
3 Thomas Herndon, Michael Ash, and Robert Pollin,
‘Does High Public Debt Consistently Stife Economic
Growth? A Critique of Reinhart and Rogof,’ Working
Paper Series 322 (Political Economy Research Institute,
University of Massachusetts, Amherst: April 2013).
4 See Chris Cook, ‘Reinhart-Rogo recrunch the numbers,’
ft.com blog, Financial Times (17 April 2013); Carmen
M. Reinhart, ‘Response to critics about content,’
Carmen M. Reinhart's website (26 April 2013).
5 Justin Fox, ‘Reinhart, Rogof, and how the economic sausage
is made,’ HBR blog, Harvard Business Review (17 April
2013); Brad Plumer, ‘Is the evidence for austerity based
on an Excel spreadsheet error?’ Wonkblog, Washington
Post (16 April 2013).
6 Mike Konczal, ‘Researchers nally replicated Reinhart-
Rogof, and there are serious problems,’ Next New Deal
Rortybomb blog (Roosevelt Institute, 16 April 2013);
Matthew Yglesias, ‘Is the Reinhart-Rogo result based
on a simple spreadsheet error?’ Moneybox blog, Slate
(16 April 2013).
7 Michael Hiltzik, ‘How an Excel error fueled panic over
the federal debt,’ LA Times (16 April 2013); Peter Coy,
'FAQ: Reinhart, Rogof and the Excel error that changed
history,’ Bloomberg BusinessWeek (18 April 2013);
Eamon Murphy, ‘Math in a time of Excel: Economists’
error undermines infuential paper,’ Daily Finance blog
(19 April 2013).
8 Carmen M. Reinhart and Kenneth S. Rogof, is Time
is Di erent: Eight Centuries of Financial Folly (Princeton,
NJ: Princeton University Press, 2009).
9 See, for example, Paul Krugman, ‘How the case for austerity
has crumbled,’ e New York Review of Books (6 June 2013).
10 Carmen M. Reinhart and Kenneth S. Rogof, ‘Letter to
PK,’ Carmen M. Reinhart’s website (25 May 2013); F.F.
Wiley, ‘It's time to change focus from Reinhart-Rogo
witch hunts to Krugman’s contradictions,’ cyniconomics.
com (28 May 2013).
11 See, for example, ‘Is the academic premise for austerity
in the Eurozone crumbling? Not quite …' Open Europe
blog (17 April 2013).
12 Carmen Reinhart and Kenneth Rogof, ‘Te Reinhart
and Rogof response to critics about intent: Debt, growth,
and reality,’ Carmen M. Reinhart’s website (30 April
2013); ‘Reinhart and Rogof: Selected interviews, op-eds
and media on the policy response to crisis,' Carmen M.
13 Editorial, ‘Rogoff-Reinhart error is not the source of
global “austerity”,’ e Washington Post (21 April 2013).
14 Tyler Cowen, ‘What’s the critical debt-GDP ratio,’ Marginal
Revolution blog (23 July 2010).
15 ‘A note on the New Zealand data,’ Carmen M. Reinhart’s
website (27 April 2013).
16 See, for example, Matthew C. Klein, ‘Reinhart and
Rogof were right about New Zealand,’ Bloomberg View
(30 April 2013).
17 F.F. Wiley, ‘Answering the most important question in
today's economy,’ cyniconomics.com (20 March 2013).
18 John Maudlin and Jonathan Tepper, Endgame: e End of
the Debt Supercycle and How It Changes Everything
(Hoboken, NJ: John Wiley, 2011), 113.
19 Paul Krugman, ‘Reinhart and Rogoff are not happy,’
The New York Times (26 May 2013); Paul Krugman,
‘How the case for austerity has crumbled,’ as above.
20 Paul Krugman, ‘A fscal train wreck,’ e New York Times
(11 March 2003).
21 I limited the analysis to sovereign nations by excluding
two episodes in South Africa between the Boer Wars and
one in Sri Lanka from the same period. I also left out
large debt-to-GDP swings in Ghana following its
1957 independence, after failing to fnd corroborating
accounts in narrative histories. All other episodes meeting
the 105%/90% criteria (above) are included and based
on central government debt where available, general
government debt otherwise.
22 F.F. Wiley, ‘Answering the most important question in
today's economy,’ as above.
23 F.F. Wiley, ‘Testing Krugman’s debt reduction strategy
(and nding it fails),’ cyniconomics.com (10 June 2013).
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