Public debt and economic growth – economic systems matter
Markus Ahlborn () and
Additional contact information
Markus Ahlborn: Georg-August University Göttingen
International Economics and Economic Policy, 2018, vol. 15, issue 2, No 7, 373-403
Abstract Most studies on the relationship between public debt and economic growth implicitly assume homogeneous debt effects across their samples. We –in accordance with recent literature– challenge this view and state that there likely is a great deal of cross-country heterogeneity in that relationship. However, other than scholars assuming that all countries are different, we expect that clusters of countries differ. We identify three country clusters with distinct economic systems: Liberal (Anglo Saxon), Continental (Core EU members) and Nordic (Scandinavian). We argue that different degrees of fiscal uncertainty at comparable levels of public debt between those economic systems constitute a major source of heterogeneity in the debt-growth relationship. Our empirical evidence supports this assumption. Continental countries face more growth reducing public debt effects than especially Liberal countries. There, public debt apparently exerts neutral or even positive growth effects, while for Nordic countries a non-linear relationship is discovered, with negative debt effects kicking in at public debt values of around 60% of GDP.
Keywords: Public debt; Economic growth; Economic systems; Fiscal policy; Welfare state (search for similar items in EconPapers)
JEL-codes: E62 P10 P51 H10 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s10368-017-0396-0 Abstract (text/html)
Access to full text is restricted to subscribers.
Working Paper: Public debt and economic growth: Economic systems matter (2016)
Working Paper: Public debt and economic growth: Economic systems matter (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:iecepo:v:15:y:2018:i:2:d:10.1007_s10368-017-0396-0
Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10368/PS2
Access Statistics for this article
International Economics and Economic Policy is currently edited by Paul J.J. Welfens, Holger C. Wolf, Christian Pierdzioch and Christian Richter
More articles in International Economics and Economic Policy from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().