The effect of public debt on growth in multiple regimes

Andros Kourtellos (), Thanasis Stengos and Chih Ming Tan

Journal of Macroeconomics, 2013, vol. 38, issue PA, 35-43

Abstract: We employ a structural threshold regression methodology to investigate the heterogeneous effects of debt on growth using public debt as a threshold variable as well as several other plausible variables. Our methodology allows us to address parameter heterogeneity that characterizes cross-country growth data and at the same time account for endogeneity. We find strong evidence for threshold effects based on democracy, which implies that higher public debt results in lower growth for countries in the Low-Democracy regime. Our results are consistent with the presence of parameter heterogeneity in the cross-country growth process due to fundamental determinants of economic growth proposed by the new growth theories.

Keywords: Parameter heterogeneity; Public debt; Debt threshold; Threshold regression (search for similar items in EconPapers)
JEL-codes: C59 O40 Z12 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (119)

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Related works:
Working Paper: The Effect of Public Debt on Growth in Multiple Regimes (2012)
Working Paper: The Effect of Public Debt on Growth in Multiple Regimes (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:38:y:2013:i:pa:p:35-43

DOI: 10.1016/j.jmacro.2013.08.023

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