Public debt and economic growth: threshold effect and its influence factors

Zhongmin Liu and Jia Lyu

Applied Economics Letters, 2021, vol. 28, issue 3, 208-212

Abstract: We investigate the effect of public debt on economic growth and its influencing factors by using a panel data of 102 countries over the period 1980–2016. Results show that there is a non-linear relationship between public debt and economic growth, this relationship exists in developing, emerging market and developed countries. However, the thresholds of public debt for different types of countries do not have uniqueness and determinacy, which vary with current account balance, gross savings, crisis and degrees of opening, these variable effects on the three groups of countries have significant difference. The findings suggest that policymakers should control the scale of public debt and its influence factors to support longer-term economic growth.

Date: 2021
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DOI: 10.1080/13504851.2020.1740157

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