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Nonlinearities in the relationship between debt and growth: (no) evidence from over two centuries

Eberhardt, Markus

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Abstract

I revisit the popular concern over a nonlinearity or threshold in the relationship between public debt and growth employing long time series data from up to 27 countries. My empirical approach recognises that standard time series arguments for long-run equilibrium relations between integrated variables (cointegration) break down in nonlinear specifications such as those predominantly applied in the existing debt-growth literature. Adopting the novel co-summability approach my analysis overcomes these difficulties to find no evidence for a systematic long-run relationship between debt and growth in the bivariate and economic theory-based multivariate specifications popular in this literature.

Journal Article Type Article
Journal Macroeconomic Dynamics
Print ISSN 1365-1005
Electronic ISSN 1469-8056
Publisher Cambridge University Press (CUP)
Peer Reviewed Peer Reviewed
APA6 Citation Eberhardt, M. (in press). Nonlinearities in the relationship between debt and growth: (no) evidence from over two centuries. Macroeconomic Dynamics, https://doi.org/10.1017/S1365100517000347
DOI https://doi.org/10.1017/S1365100517000347
Keywords public debt; economic growth; nonlinearity; summability and co-summability
Publisher URL https://www.cambridge.org/core/journals/macroeconomic-dynamics/article/nonlinearities-in-the-relationship-between-debt-and-growth-no-evidence-from-over-two-centuries/6BC40BD1F48C0301D74366B65E91DD23
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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