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Public debt and economic growth: threshold effect and its influence factors

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  • Zhongmin Liu
  • Jia Lyu

Abstract

We investigate the effect of public debt on economic growth and its influencing factors by using a panel data of 102 countries over the period 1980–2016. Results show that there is a non-linear relationship between public debt and economic growth, this relationship exists in developing, emerging market and developed countries. However, the thresholds of public debt for different types of countries do not have uniqueness and determinacy, which vary with current account balance, gross savings, crisis and degrees of opening, these variable effects on the three groups of countries have significant difference. The findings suggest that policymakers should control the scale of public debt and its influence factors to support longer-term economic growth.

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  • Zhongmin Liu & Jia Lyu, 2021. "Public debt and economic growth: threshold effect and its influence factors," Applied Economics Letters, Taylor & Francis Journals, vol. 28(3), pages 208-212, February.
    • Handle: RePEc:taf:apeclt:v:28:y:2021:i:3:p:208-212
    DOI: 10.1080/13504851.2020.1740157
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    Cited by:

    1. Oguzhan Bozatli & Seref Can Serin & Murat Demir, 2024. "The causal relationship between public debt and economic growth in G7 countries: new evidence from time and frequency domain approaches," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-27, June.
    2. Mindaugas Butkus & Diana Cibulskiene & Lina Garsviene & Janina Seputiene, 2021. "Empirical Evidence on Factors Conditioning the Turning Point of the Public Debt–Growth Relationship," Economies, MDPI, vol. 9(4), pages 1-22, December.
    3. Sue Abdinnour & Sesan Oluseyi Adeniji, 2023. "Empirical analysis of the impact of entrepreneurial activity on economic growth of Global Entrepreneurship Monitor (GEM) countries," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 13(1), pages 1-11, December.
    4. Willem Vanlaer & Mattia Picarelli & Wim Marneffe, 2021. "Debt and Private Investment: Does the EU Suffer from a Debt Overhang?," Open Economies Review, Springer, vol. 32(4), pages 789-820, September.
    5. Mihaela Onofrei & Ionel Bostan & Bogdan Narcis Firtescu & Angela Roman & Valentina Diana Rusu, 2022. "Public Debt and Economic Growth in EU Countries," Economies, MDPI, vol. 10(10), pages 1-23, October.

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