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This Time They Are Different: Heterogeneity and Nonlinearity in the Relationship Between Debt and Growth
Author:
Mr. Markus Eberhardt null

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Mr. Andrea F Presbitero
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https://orcid.org/0000-0003-4622-941X
Series:
IMF Working Papers
Volume/Issue:
Volume 2013: Issue 248
Language:
English
Publication Date:
17 Dec 2013
DOI:
https://doi.org/10.5089/9781484309285.001
ISBN:
9781484309285
ISSN:
1018-5941
Pages:
55
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
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund