Public debt and growth in Asian developing economies: evidence of non-linearity and geographical heterogeneity

Gan-Ochir Doojav () and Munkhbayar Baatarkhuu ()
Additional contact information
Munkhbayar Baatarkhuu: Bank of Mongolia

Eurasian Economic Review, 2024, vol. 14, issue 2, No 8, 452 pages

Abstract: Abstract This paper examines the nonlinear effects of public debt on economic growth in Asian developing economies through the application of panel Generalized Method of Moments (GMM) regressions and panel vector autoregression (VAR) models. Our analysis reveals a statistically significant nonlinear (i.e., an inverted U-shape) relationship between public debt (as a percentage of GDP) and GDP per capita growth. The turning points are identified at 52 percent for all Asian developing economies and 50 percent for Asian coastal developing economies. Asymmetric mutual feedback effects are observed between economic growth and public debt, contingent on the level of public debt. These two-way effects are both statistically significant and more pronounced when public debt surpasses its threshold level. Additionally, our results unveil geographical (cross-country) heterogeneity in the mutual feedback effects. These findings carry significant policy implications, emphasizing the necessity of employing region-specific debt threshold levels and asymmetric response coefficients in the analysis of public debt policies.

Keywords: Public debt; Economic growth; Asian developing countries; Sustainability of debt; Non-linearity; Geographical heterogeneity (search for similar items in EconPapers)
JEL-codes: C23 E62 F34 H63 O11 R11 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s40822-023-00259-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Public debt and growth in Asian developing economies: evidence of non-linearity and geographical heterogeneity (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:eurase:v:14:y:2024:i:2:d:10.1007_s40822-023-00259-3

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40822

DOI: 10.1007/s40822-023-00259-3

Access Statistics for this article

Eurasian Economic Review is currently edited by Dorothea Schäfer

More articles in Eurasian Economic Review from Springer, Eurasia Business and Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().