Un réexamen de la relation non linéaire entre déficits budgétaires et croissance économique
Alexandru Minea () and
Patrick Villieu ()
Revue économique, 2008, vol. 59, issue 3, 561-570
We propose a simple theoretical model showing the existence of non-linear effects of fiscal deficits on economic growth, depending on the public debt to gdp ratio. For low debt values, raising deficit is growth increasing, as the debt burden raise may be absorbed by a decrease in government consumption. When public debt is high, government can no longer reduce public consumption, and productive spending must negatively adjust, therefore raising deficits becomes growth-reducing. We aim confirming the robustness of our results in an empirical analysis using data from 19 oecd countries. Estimations exhibit the existence of a non-linear effect of fiscal deficits on economic growth, depending on the public debt ratio. Classification JEL : H62, H63, E62
JEL-codes: H62 H63 E62 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:cai:recosp:reco_593_0561
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