{
  "title": "Debt Overhang or Debt Irrelevance? Revisiting the Debt-Growth Link",
  "publication": "IMF Working Papers, December 1, 2005",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/debt-overhang-or-debt-irrelevance-revisiting-the-debt-growth-link-18707",
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  "summary": "Do Highly Indebted Poor Countries (HIPCs) suffer from a debt overhang? Is debt relief going to improve their growth rates?",
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      "heading": "Summary and research question",
      "content": "- Examines whether Highly Indebted Poor Countries (HIPCs) suffer from a debt overhang and whether debt relief will improve their growth rates.\n- Analyzes how the debt-growth relationship varies with indebtedness levels and other country characteristics in a panel of developing countries."
    },
    {
      "heading": "Key findings",
      "content": "- There is a negative marginal relationship between debt and growth at intermediate levels of debt, but not:\n  - at very low debt levels, below the “debt overhang” threshold, or\n  - at very high debt levels, above the “debt irrelevance” threshold.\n- In countries with good policies and institutions:\n  - Overhang occurs when debt rises above 15-30 percent of GDP.\n  - The marginal effect of debt on growth becomes irrelevant above 70-80 percent of GDP.\n- In countries with bad policies and institutions:\n  - Overhang and irrelevance thresholds seem to be lower.\n  - The authors note they cannot rule out the possibility that debt does not matter at all in such contexts."
    },
    {
      "heading": "Methods and scope",
      "content": "- Uses a panel of developing countries to assess variation in the debt-growth relationship by indebtedness level and country characteristics.\n\n---\n\n Content in this bundle\n\n- wp05223\n  - wp05223 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp05223 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/debt-overhang-or-debt-irrelevance-revisiting-the-debt-growth-link-18707"
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    "Authors: Tito Cordella, Luca A Ricci, Marta Ruiz-Arranz",
    "Published: December 1, 2005",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451862423.001",
    "Examines whether Highly Indebted Poor Countries (HIPCs) suffer from a debt overhang and whether debt relief will improve their growth rates.",
    "Analyzes how the debt-growth relationship varies with indebtedness levels and other country characteristics in a panel of developing countries.",
    "There is a negative marginal relationship between debt and growth at intermediate levels of debt, but not:",
    "In countries with good policies and institutions:",
    "In countries with bad policies and institutions:",
    "Uses a panel of developing countries to assess variation in the debt-growth relationship by indebtedness level and country characteristics.",
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