Document Type
Article
Publication Date
12-2013
Publication Title
Journal of Macroeconomics
Volume
38
Abstract
We employ a structural threshold regression methodology to investigate the heterogeneous effects of debt on growth using public debt as a threshold variable as well as several other plausible variables. Our methodology allows us to address parameter heterogeneity that characterizes cross-country growth data and at the same time account for endogeneity. We find strong evidence for threshold effects based on democracy, which implies that higher public debt results in lower growth for countries in the Low-Democracy regime. Our results are consistent with the presence of parameter heterogeneity in the cross-country growth process due to fundamental determinants of economic growth proposed by the new growth theories.
First Page
35
Last Page
43
DOI
10.1016/j.jmacro.2013.08.023
ISSN
0164-0704
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Recommended Citation
Andros Kourtellos, Thanasis Stengos, and Chih Ming Tan. "The effect of public debt on growth in multiple regimes" (2013). Economics & Finance Faculty Publications. 5.
https://commons.und.edu/ef-fac/5