As quick background, R&R had a study that found that higher government debt levels correlated to lower, even negative, economic growth. More recently, others have found computational errors that exaggerated this result, and have criticized their methodology, particularly their approach to weighting data from different countries and years.
A few thoughts:
- A major reasons the errors were found is that R&R actually made their data available for replication. This is apparently rare - certainly it is rare in the climate world. I am glad they are getting kudos for this and hope the academic world can find a way to incentivize / force more data sharing
- I would not have expected a direct relationship between country debt levels and economic growth. What I would expect is that growth can still be good at higher debt levels, but the risk of hitting a tipping point starts to rise dangerously with debt levels. Eventually levels get so high that an interest rate shock or liquidity shock is almost inevitable
- More than a relation between GDP growth and absolute debt levels, I would have expected a relationship between GDP growth and changes in debt level. Absolute government debt levels may represent resources removed from the productive economy years and decades earlier. Increases in government debt represent recent decreases in capital available for productive use.