This Time They’re Different: Heterogeneity and Nonlinearity in the Relationship between Debt and Growth

Markus Eberhardt and Andrea Presbitero

No 2013/10, Discussion Papers from University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM)

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 modelling the debt-growth relationship as heterogeneous across countries. We investigate the issue of nonlinearities (‘debt thresholds’) in both the cross- and within-country dimensions, employing novel approaches and diagnostics from the time-series literature adapted for use in the panel. Our findings suggest that whatever the shape and form of the debt-growth relationship, it differs across countries, so that appropriate policies for one country may be seriously misguided in another.

Keywords: economic growth; public debt; common factor model; nonlinearity; summability, balance and co-summability; asymmetric ARDL (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-fdg
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Citations: View citations in EconPapers (43)

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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 Are Different: Heterogeneity and Nonlinearity in the Relationship Between Debt and Growth (2013)
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