A new report commissioned by the International Monetary Fund (IMF) has refuted claims made by Harvard economists Carmen Reinhart and Kenneth Rogoff that high government debt levels stifle economic growth.
The new research released on Thursday by IMF researchers Andrea Pescatori, Damiano Sandri and John Simon states that they find no evidence that there is any particular debt threshold above which medium-term growth prospects are dramatically compromised.
"We find no evidence of threshold effects over any but the shortest-term horizons....the remaining relationship between debt and growth is relatively muted and the magnitude is much smaller than the dramatic figures suggested in earlier studies," the three economists said in the report.
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"Furthermore, we find the debt trajectory can be as important as the debt level in understanding future growth prospects, since countries with high but declining debt appear to grow equally as fast as countries with lower debt."
In 2010, an academic paper called "Growth in a Time of Debt" released by Reinhart and Rogoff argued that there is a threshold effect, meaning debt above 90 percent of a country's GDP (gross domestic product) is associated with dramatically worse growth outcomes.
Their research is frequently cited as one of the inspirations for austerity measures, with high-profile advocates including the Olli Rehn, the European Union's Commissioner for Economic and Monetary Affairs, citing it during key debates about the need for euro zone budgetary tightening.
In April 2013, "Growth in a Time of Debt" came under attack from an economics doctoral student and two professors at the University of Massachusetts who claimed it contained a mathematical error. Reinhart and Rogoff responded three times to the research paper, accepting the error but rebutting allegations that the error stemmed from "selective exclusion" and explained that it didn't change the key theme of their research.
(Read More: Reinhart-Rogoff Error Sparks Austerity Debate)