On the relationship between economic growth and government debt for Bulgaria. Test of the Reinhart-Rogoff hypothesis

Yu Hsing
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Yu Hsing: Southeastern Louisiana University, USA

Theoretical and Applied Economics, 2020, vol. XXVII, issue 4(625), Winter, 187-194

Abstract: Based on an extended production function, this paper finds that the turning point of the government debt ratio for Bulgaria is estimated to be 45.2631%, suggesting that an increase in the debt ratio beyond 45.2631% will cause the growth rate of real GDP to decline. This turning point for Bulgaria is far less than the 90% turning point proposed by Reinhart and Rogoff. Therefore, the Reinhart-Rogoff hypothesis does not apply to Bulgaria.

Keywords: fiscal policy; government debt ratio; Reinhart-Rogoff hypothesis; debt threshold. (search for similar items in EconPapers)
Date: 2020
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