Does sovereign debt weaken economic growth? A panel VAR analysis

Matthijs Lof and Tuomas Malinen

Economics Letters, 2014, vol. 122, issue 3, 403-407

Abstract: We estimate panel vector autoregressions to analyze the highly disputed relationship between sovereign debt and economic growth. Using data on 20 developed countries, we find no evidence for a robust effect of debt on growth, even for higher levels of debt. We do find a significant negative reverse effect of growth on debt, which explains the negative correlation.

Keywords: Public debt; Debt share; GDP growth (search for similar items in EconPapers)
JEL-codes: C33 H63 O43 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (78)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:122:y:2014:i:3:p:403-407

DOI: 10.1016/j.econlet.2013.12.037

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