Impact of Public Debt on Economic Growth in BRICS Economies

Magulsha George () and K. R. Shanmugam ()
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Magulsha George: Madras School of Economics
K. R. Shanmugam: Madras School of Economics

A chapter in India's Public Finance and Policy Challenges in the 2020s, 2025, pp 313-330 from Springer

Abstract: Abstract Global financial crisis, the Euro-sovereign crisis and COVID-19 pandemic affected all economies in the world and countries’ public debt increased significantly. However, the debt beyond certain threshold will be a hindrance to economic growth. This study examines the debt-growth relation in BRICS countries using relevant data from 1992 to 2021 and penalized spline method and computes the threshold debt levels of these nations using the threshold regression method. The results indicate a positive and significant relation between debt and growth in Brazil and South Africa, a negative relation in China and no significant relation in India. The debt threshold level is estimated at 73.9% for Brazil, 20.8% for Russia, 70.4% for India, 37.0% for China and 31.5% for South Africa. The findings and policy suggestions of this study will be useful for policymakers and other stakeholders to take appropriate strategies to control the debt level below the threshold level which will be growth-inducing.

Keywords: Public debt; BRICS nations; Economic growth; Threshold; Spline method; Global crisis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isbchp:978-981-96-2860-5_17

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DOI: 10.1007/978-981-96-2860-5_17

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