Debt‐Overhang‐Reinhart‐Rogoff and Exogenous Growth Theory in BRICS Countries

Akash Kumar Biswal and Biswajit Patra

Review of Development Economics, 2026, vol. 30, issue 2, 1048-1062

Abstract: This paper examines the applicability of the Overhang‐Reinhart‐Rogoff theory and Exogenous Growth theory in the context of BRICS nations, using annual data from 1990 to 2022. The empirical analysis employs the panel Auto Regressive Distributed Lag (ARDL) model, supported by robustness checks using the Panel Corrected Standard Error (PCSE) and Feasible Generalized Least Squares (FGLS) models. The findings reveal that both the Overhang theory and Exogenous Growth theory are valid in the BRICS context, while the Reinhart‐Rogoff theory does not hold. In addition, the results from the PCSE and FGLS models align with and corroborate the conclusions drawn from the ARDL model. From the policy point of view, the Reinhart‐Rogoff theory suggests that the overhang point of public debt is 90% of the GDP, but in the case of BRICS countries, the result shows it is around 45% of the GDP; however, it may vary from country to country. The result suggests that the government should focus on managing public debt effectively from the initial stages rather than waiting for it to reach 90% of GDP, while the turning point largely depends on how the debt is utilized. Additionally, the government should prioritize international exposure to boost economic growth.

Date: 2026
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