Cyclical Budgetary Policy and Economic Growth: What Do We Learn From OECD Panel Data?

Philippe Aghion and Ioana Marinescu

Scholarly Articles from Harvard University Department of Economics

Abstract: This paper uses yearly panel data on OECD countries to analyze the relationship between growth and the cyclicality of government debt. We develop new time-varying estimates of the cyclicality of public debt. Our main findings can be summarized as follows: (i) less procyclical public debt growth can have significantly positive effects on productivity growth, in particular when financial development is lower; (ii) public debt growth has become increasingly countercyclical in most OECD countries over the past twenty years, but this trend has been less pronounced in the EMU; (iii) less financially developed or more open economies display less countercyclical public debt growth.

Date: 2007
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Published in NBER Macroeconomics Annual

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Chapter: Cyclical Budgetary Policy and Economic Growth: What Do We Learn from OECD Panel Data? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:3350066

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