Is There a Debt-Threshold Effect on Output Growth? | Zendy

Alexander Chudík | Zendy; Kamiar Mohaddes | Zendy; M. Hashem Pesaran | Zendy; Mehdi Raissi | Zendy

AI Assistant Blog Pricing

Home ZAIA Blog

Open Access

Is There a Debt-Threshold Effect on Output Growth?

Author(s) -

Alexander Chudík,

Kamiar Mohaddes,

M. Hashem Pesaran,

Mehdi Raissi

Publication year - 2016

Publication title -

the review of economics and statistics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 8.999

H-Index - 165

eISSN - 1530-9142

pISSN - 0034-6535

DOI - 10.1162/rest_a_00593

Subject(s) - debt , economics , panel data , threshold model , context (archaeology) , econometrics , sample (material) , empirical evidence , monetary economics , macroeconomics , geography , philosophy , chemistry , epistemology , chromatography , archaeology

This paper studies the relationship between public debt expansion and economic growth and investigates whether the debt-growth relation varies with the level of indebtedness. We contribute theoretically by developing tests for threshold effects in the context of dynamic heterogeneous panel data models with cross-sectionally dependent errors. In the empirical application, using data on a sample of forty countries over the 1965–2010 period, we find no evidence for a universally applicable threshold effect in the relationship between public debt and economic growth. Regardless of the threshold, however, we find significant negative effects of public debt buildup on output growth.

The content you want is available to Zendy users.

Already have an account? Click here to sign in.

Having issues? You can contact us here

Accelerating Research