This Time They Are Different : Heterogeneity and Nonlinearity in the Relationship Between Debt and Growth
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Summary:
We study the long-run relationship between public debt and growth in a large panel of countries. Our analysis takes particular note of theoretical arguments and data considerations in modeling the debt-growth relationship as heterogeneous across countries. We investigate the issue of nonlinearities (debt thresholds) in both the cross-country and within-country dimensions, employing novel methods and diagnostics from the time-series literature adapted for use in the panel. We find some support for a nonlinear relationship between debt and long-run growth across countries, but no evidence for common debt thresholds within countries over time.
Series:
Working Paper No. 13/248
Subject:
English
Publication Date:
December 17, 2013
ISBN/ISSN:
9781484309285/1018-5941
Stock No:
WPIEA2013248
Format:
Paper
Pages:
55
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