Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/111370
Authors: 
Lee, Sokbae
Park, Hyunmin
Seo, Myung Hwan
Shin, Youngki
Year of Publication: 
2014
Series/Report no.: 
cemmap working paper, Centre for Microdata Methods and Practice CWP39/14
Abstract: 
Using the Reinhart-Rogoff dataset, we find a debt threshold not around 90 percent but around 30 percent above which the median real GDP growth falls abruptly. Our work is the first to formally test for threshold effects in the relationship between public debt and median real GDP growth. The null hypothesis of no threshold effect is rejected at the 5 percent significance level for most cases. While we find no evidence of a threshold around 90 percent, our findings suggest that the debt threshold for economic growth may exist around a relatively small debt-to-GDP ratio of 30 percent. Empirical results are more robust with the postwar sample than the long sample that goes before World War II.
Subjects: 
Government debt
growth
fiscal policy
median regression
testing
JEL: 
H60
F34
E62
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
452.79 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.