Debt to GDP Ratios and Excel

26 Apr

Recently some Harvard economists (Reinhart and Rogoff) were found with an excel error within their paper (“Growth in a Time of Debt”) they had written in 2010. The paper had gained much publicity prior to this revelation as it was often quoted during economic policy discussions. The paper’s conclusion suggested that the higher debt to GDP ratios that countries ran, the less chance they had of economic growth.

Although the error did impact the numbers slightly, the conclusion of the paper remained intact. No real policies were affected in the process and it remains generally accepted that countries that operate with a lower debt to GDP number have a better shot at economic growth.

Robert J. Samuelson summarized the situation quite well in :

“The Reinhart Rogoff Brawl”

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