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When economic growth causes increased illness and healthcare costs, our measurements are missing some basics.
If high national debt is associated with slow economic growth, is it because excessive debt impedes growth, or because slow growth causes countries to accumulate more debt?
It is a little-understood disease, dating back years, that stunts growth, causes mental retardation and sets off sudden seizures.
Research by economists at the IMF suggests that income inequality slows growth, causes financial crises and weakens demand.
So Dube does the exercise, and it looks like this: Clearly, the data look a lot more like story #2, in which slow growth causes high debt, than story #1, which is what everyone hyping Reinhart-Rogoff claimed.
But Germany's inflation rate is only 1% and it could well drop over the next year, as weaker growth causes its output gap to widen by more than elsewhere.
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Or does slow growth cause high debt?
In some cases charcoal stimulates bacterial growth, causing carbon emissions from soils to rise.
But more austerity in the public sector and more deleveraging in the private sector would lead to weaker growth, causing yet more deflation.
Higher taxes stifle growth, cause more unemployment and continue to decrease the strength of the tax base.
But now investors seem to be worried about a slowdown in growth caused by governments cutting back spending.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com