Do Higher Public Debt Levels Reduce Economic Growth?

Philipp Heimberger

No 211, wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw

Abstract: While the effect of higher public debt levels on economic growth has received much attention, the literature partly points to contradictory results. This paper applies meta-regression methods to 826 estimates from 48 primary studies. The unweighted mean of the reported results suggests a 10 percentage points increase in public-debt-to-GDP is associated with a decline in annual growth rates by 0.14 percentage points, with a 95% confidence interval from 0.10 to 0.18 percentage points. However, we cannot reject a zero effect after correcting for publication bias. Furthermore, the meta-regression analysis shows that tackling endogeneity between public debt and growth makes estimates lean less towards the negative side. In testing for non-linear effects, our results do not point to a universal public-debt-to-GDP threshold beyond which growth slows threshold estimates are sensitive to data and econometric choices. These findings imply a lack of evidence of a consistently negative growth effect of higher public-debt-to-GDP.

Keywords: Public debt; economic growth; meta-analysis (search for similar items in EconPapers)
JEL-codes: E62 F34 O11 O47 (search for similar items in EconPapers)
Pages: 36 pages including 3 Tables and 4 Figures
Date: 2021-11
New Economics Papers: this item is included in nep-fdg, nep-gro and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Published as wiiw Working Paper

Downloads: (external link)
https://wiiw.ac.at/do-higher-public-debt-levels-re ... -growth-dlp-5976.pdf (application/pdf)

Related works:
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:wii:wpaper:211

Ordering information: This working paper can be ordered from
https://wiiw.ac.at

Access Statistics for this paper

More papers in wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw Contact information at EDIRC.
Bibliographic data for series maintained by Customer service ().