Debt and growth: Is there a constant tipping point?

Lixiong Yang and Jen-Je Su

Journal of International Money and Finance, 2018, vol. 87, issue C, 133-143

Abstract: This paper highlights the crucial role of a time-varying threshold effect of public debt on economic growth. Our contribution is twofold. First, we extend the constant-threshold regression kink model of Hansen (2017) by allowing for a time-varying, state-dependent threshold. Second, we apply our model to investigate the effect of debt on growth, using data from the U.S. over the period of 1791–2009. Our empirical results clearly support a nonlinear debt-threshold effect and the threshold is time-varying and state-dependent.

Keywords: Debt; Growth; Testing; Time-varying threshold (search for similar items in EconPapers)
JEL-codes: C13 C22 C51 E62 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560618303656
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:87:y:2018:i:c:p:133-143

DOI: 10.1016/j.jimonfin.2018.06.002

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().