Debunking Debt-to-GDP Ratio as Measure of Government Indebtedness
Jonathan Berk and Jules van Binsbergen argue that debt-to-GDP ratio is a flawed measure of government indebtedness. The duo claims that this metric compares a “stock” variable (debt) to a “flow” variable (GDP), leading to distorted conversations about the sustainability of rising debt levels. Berk credits economists Carmen Reinhart and Kenneth Rogoff with popularizing the … Read more