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

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Author/Editor: Markus Eberhardt, Andrea Presbitero
Release Date: © December, 2013
ISBN : 978-1-48431-054-0
Stock #: WPIET2013248
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Description

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 investigatethe 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 andlong-run growth across countries, but no evidence for common debt thresholds within countries over time.

Taxonomy

Economic policy , Fiscal policy




More publications in this series: Working Papers


More publications by: Markus Eberhardt ; Andrea Presbitero