This Time They Are Different: Heterogeneity and Nonlinearity in the Relationship Between Debt and Growth

Markus Eberhardt and Andrea Presbitero

No 2013/248, IMF Working Papers from International Monetary Fund

Abstract: We study the long-run relationship between public debt and growth in a large panel of countries. Our analysis takes particular note of theoretical arguments and data considerations in modeling the debt-growth relationship as heterogeneous across countries. We investigate the issue of nonlinearities (debt thresholds) in both the cross-country and within-country dimensions, employing novel methods and diagnostics from the time-series literature adapted for use in the panel. We find some support for a nonlinear relationship between debt and long-run growth across countries, but no evidence for common debt thresholds within countries over time.

Keywords: WP; growth; public debt; common factor model; nonlinearity; asymmetric ARDL; GDP ratio; descriptive analysis; growth rate; debt coefficient; linear regression; Stocks; Personal income; Debt burden; Financial sector development; Global (search for similar items in EconPapers)
Pages: 55
Date: 2013-12-17
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Citations: View citations in EconPapers (57)

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Related works:
Working Paper: This Time They're Different: Heterogeneity;and Nonlinearity in the Relationship;between Debt and Growth (2013)
Working Paper: This Time They’re Different: Heterogeneity and Nonlinearity in the Relationship between Debt and Growth (2013)
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