## Public Debt and Growth

_IMF Working Papers, July 1, 2010_

## Source details

**Canonical URL:** [Public Debt and Growth](https://www.imf.org/en/publications/wp/issues/2016/12/31/public-debt-and-growth-24080)

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## Bibliographic details
- Authors: Jaejoon Woo, Manmohan S. Kumar
- Published: July 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455201853.001

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### Key findings
- The empirical results suggest an inverse relationship between initial debt and subsequent growth.
- On average, a 10 percentage point increase in the initial debt-to-GDP ratio is associated with a slowdown in annual real per capita GDP growth of around 0.2 percentage points per year.
- The impact is somewhat smaller in advanced economies.
- There is some evidence of nonlinearity with higher levels of initial debt having a proportionately larger negative effect on subsequent growth.
- The adverse effect largely reflects a slowdown in labor productivity growth mainly due to reduced investment and slower growth of capital stock.

### Analysis and scope
- Analysis based on a panel of advanced and emerging economies over almost four decades.
- The study takes into account a broad range of determinants of growth and addresses estimation issues including reverse causality and endogeneity.
- Threshold effects, nonlinearities, and differences between advanced and emerging market economies are examined.

### Methodology and technical notes
- Estimation techniques and considerations include addressing reverse causality and endogeneity.
- The study examines threshold effects and nonlinearities across country groups (advanced and emerging).

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## Content in this bundle

- **Public Debt and Growth;by Manmohan S. Kumar and Jaejoon Woo; IMF Working Paper 10/174;July 1, 2010**
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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/public-debt-and-growth-24080_