High Public Debt Levels Depress Economic Growth
Created on February 19, 2013
PERCENTAGE OF GDP
An analysis of economic data for 22 countries over 110 years indicates that higher levels of debt result in lower levels of economic growth.
Public Debt at 120% GDP
Public Debt at 90% GDP
No Public Debt Overhang
Source: Carmen M. Reinhart, Vincent R. Reinhart, and Kenneth S. Rogoff, “Public Debt Overhangs: Advanced-Economy Episodes Since 1800,"Journal of Economic Perspectives, Vol. 26, No. 3 (Summer 2012), pp. 69–86, http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.26.3.69 (accessed December 27, 2012).