Public Debt , Economic Growth and Nonlinear Effects : Myth or Reality ?

@inproceedings{gert2013PublicD,
  title={Public Debt , Economic Growth and Nonlinear Effects : Myth or Reality ?},
  author={Bal{\'a}zs {\'E}gert},
  year={2013}
}
  • Balázs Égert
  • Published 2013
This paper puts the Reinhart-Rogoff dataset to a formal econometric testing to see whether public debt has a negative nonlinear effect on growth if public debt exceeds 90% of GDP. Using nonlinear threshold models, we show that the negative nonlinear relationship between debt and growth is very sensitive to modelling choices. We also show that when nonlinearity is detected, the negative nonlinear effect kicks in at much lower levels of public debt (between 20% and 60% of GDP). These results… CONTINUE READING
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