The authors study the long-run relationship between public debt and growth in a large panel of countries. Their analysis builds on theoretical arguments and data considerations in modelling the debt–growth relationship as heterogeneous across countries. They investigate the debt–growth nexus adopting linear and non-linear specifications, employing novel methods and diagnostics from the time-series literature adapted for use in the panel. They find some support for a negative relationship between public debt and long-run growth across countries, but no evidence for a similar, let alone common, debt threshold within countries.
This work is part of the ‘Macroeconomics in Low-income countries’ programme”
Markus Eberhardt, Andrea F. Presbitero, Public debt and growth: Heterogeneity and non-linearity, Journal of International Economics, Volume 97, Issue 1, 2015, Pages 45-58,https://doi.org/10.1016/j.jinteco.2015.04.005.
Public debt and growth: Heterogeneity and non-linearity
Published 30 September 2015