link here to article
Robert Shiller raises questions about the misuse of the debt to GDP ratio. He points out that looking at the ratio on annual slices is arbitrary, and that there is nothing magical about ratios that reach a particular and arbitrary point. He provides data to support his view. He argues that the ratio increases when either the numerator or the denominator change. For example, if GDP falls and debt remains constant, the ratio will rise. He is concerned that the imposition of austerity will cause GDP to fall, and produce a rising ratio, in the distressed countries that are at risk. The result is a feedback loop that is self destructive.
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