KEY POINT: Evans creates “connection” to why debt is the new excuse for “more” rather than “less” in action…….
Reference: Debt levels = slower growth … studies by Rogoff and recent paper presented in Jackson Hole called: The real effects of debt (Now the academic policy context!!!!!)
Below is my “short-notes” on the paper from yday:
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Gr8 paper @ jackson hole!
The real effects of debt by:
Stephen Cecchetti, m s mohanty and fabrizio zampolli
Findings:
80-100 pct debt to gdp public sector harmful....
90 pc in corp debt to gdp
85 pc for household debt
Touches on demographics gravity on growth
Ratio of debt to gdp in advanced countries risen from 165 pc in 1980 to 310 pc today
Nice discussion how debt is deemed 'intricsic and not of value' to economic models (one debtor - one creditor)
Why has debt risen?
1 access to credit
2 the great moderation
3 lower real rates
4 tax incentives on debt
Then finally some gr8 data on pp 23-25 on countries split by
Household, corp and public sector debt
Whole document only 30 ish pages and easily read.
Steen
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