Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/179333 
Year of Publication: 
2017
Series/Report no.: 
ECB Working Paper No. 2118
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
We study the relationship between debt and growth in EU countries in the years 1995-2015. We investigate the debt-growth nexus in two alternative empirical set-ups: the traditional cross-county panel regressions and mean group estimations. We find evidence of a positive long-run relationship between private sector indebtedness and economic growth, and a negative relationship between public debt and long-run growth across EU countries. However, the more immediate impact of private sector debt on growth is found to be negative, and positive for the public sector debt. We find no conclusive evidence for a common debt threshold within EU countries, neither for the private nor for the public sector, but some indication of a non-linear effect of household debt.
Subjects: 
debt
threshold
panel
European Union countries
cross-sectional dependence
JEL: 
O47
N14
H60
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3047-5
Document Type: 
Working Paper

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