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The Boston University Global Development Policy Center is a policy-oriented research center working to advance financial stability, human well-being and environmental sustainability across the globe.
The history of the North of England is a history of astonishing visions, great attempts to realise true progress, and painful deferrals of these dreams, so argues Alex Niven, who constructs this argument incisively, elegantly and movingly in The North Will Rise Again: Searching for the Future in Northern Heartlands (Bloomsbury). Niven’s intervention is a […]
I.
You enter a tavern. The crackling hearth warms your bones after trudging for weeks through the wet and windy mountains of Avanste. The place is a little run-down, but it was either here or the village Applebees, and you’re not in the mood for a Captain Bahama Mama.
“Two meads,” you call out to the elf polishing glassware.
He pulls out a couple of bottles and pops the tops. You take a sip while pushing the other bottle back toward the elf. You’re in search of the lost Amulet of Lucien, and befriending a barkeep never hurts the quest.
He accepts your gift, taking a gulp, but offers no information.
The elf gives your total—fifteen gold.
Your heart rate quickens. You should have seen this coming. What have you walked into?
Choose:
Tip (Go to section II)
Don’t Tip (Go to section III)
II.
You proudly toss down your total, including a hefty tip.
I saw a comment about the drop in the U.S. Federal debt-to-GDP ratio, which reminded me that I wanted to discuss it once the data started to settle down. As can be seen in the above chart, the public debt-to-GDP ratio went from 135% in 2020Q2 to 120% in 2022Q3 (latest figure on FRED). A drop of (roughly) 15% in the ratio without some kind of “austerity” policies might seem surprising — but it is only surprising if you look at debt dynamics the wrong way. That wrong way is relying on “real” variables — real GDP growth, real interest rates — as well as thinking too much about long-term “steady state” or “equilibrium” values.Bond Economics
The reliance on “real analysis” (ha ha) leads to silly things like charts of the U.S. debt/GDP ratio marching in a straight line towards 200%. (Yes, CBO, I am not laughing with you.) This framing also leads to neoclassical economists going on about the question: is r greater or less than g?...
Debt/GDP Ratio: Beware "Real Analysis"
Brian Romanchuk