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The Non-Linear Relationship Between Economic Growth and Public Debt

Karim Bouchrara (), Houssem Rachdi () and Khaled Guesmi
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Karim Bouchrara: IHEC Carthage Business School, Tunisia
Houssem Rachdi: IHEC Carthage Business School, Tunisia & IPAG Business School, Paris, France

Economics Bulletin, 2020, vol. 40, issue 3, 2336-2343

Abstract: This paper examines the non-linear relationship between public debt and economic growth while controlling for governance quality in a sample of 36 countries over the period 1990-2013 using a Panel Smooth Transition Regression (PSTR) framework. We document clear evidence of non-linearity in the impact of public debt on economic growth. Results from the PSTR model show that institutional quality including the level of respect for rules of law, low level of corruption and government stability influences the level of public debt, and its impact on economic growth.

Keywords: Public Debt; Institutional Quality; Economic Growth; PSTR (search for similar items in EconPapers)
JEL-codes: E2 O1 (search for similar items in EconPapers)
Date: 2020-08-24
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