The claim by R&R is that yearly GDP growth decreases abruptly (i.e. in an non-linear fashion) when debt exceeds 90% of its GDP. According to them, therefore, governments should have, in times of recession, debt reduction at the top of their economical agendas.
The response by Herndon doesn't insinuate that countries should disregard debt as a matter of concern. It doesn't even say that debt increase isn't correlated with GDP decrease. The main issue that the paper points at is that US and European governments have, based on this thesis, adopted drastic policies of austerity and budget cuts, when actually over history there isn't such a nonlinearity.
According to them, therefore, governments should have, in times of recession, debt reduction at the top of their economical agendas
I'm not sure this is right. Rogoff said "back in 2008-9, there was a reasonable chance, maybe 20% that we’d end up in another Great Depression. Spending a trillion dollars is nothing to knock that off the table." I didn't see any policy recommendations in the paper.
The main issue that the paper points at is that US and European governments have, based on this thesis, adopted drastic policies of austerity
_Maybe_ for the US, but the timing doesn't match for Europe. For the UK, the usual candidate for self-imposed austerity, Cameron was arguing for austerity before the paper became well-known.
The response by Herndon doesn't insinuate that countries should disregard debt as a matter of concern. It doesn't even say that debt increase isn't correlated with GDP decrease. The main issue that the paper points at is that US and European governments have, based on this thesis, adopted drastic policies of austerity and budget cuts, when actually over history there isn't such a nonlinearity.