May 6th Weekly Market Update
A recently detected error in a study by Harvard economists Reinhart & Rogoff has garnered much attention in the financial press lately. The study had initially concluded that once a country exceeded a 90% debt-to-gross domestic product (GDP) ratio, the pace of economic growth slowed sharply. The corrected data reveal that growth slows as debt-to-GDP rises, but at a pace not meaningfully different than at other round numbers. The study raised the issue of whether large amounts of debt are really bad. After waging a war on debt for the past several years, it may be the war on debt itself that may be bad for growth.
For the full article: Borrowing for the Future