Debt and growth: Is there a constant tipping point?
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Su, JJ
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Abstract
This paper highlights the crucial role of a time-varying threshold effect of public debt on economic growth. Our contribution is twofold. First, we extend the constant-threshold regression kink model of Hansen (2017) by allowing for a time-varying, state-dependent threshold. Second, we apply our model to investigate the effect of debt on growth, using data from the U.S. over the period of 1791–2009. Our empirical results clearly support a nonlinear debt-threshold effect and the threshold is time-varying and state-dependent.
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Journal of International Money and Finance
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87
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© 2018 Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Licence (http://creativecommons.org/licenses/by-nc-nd/4.0/) which permits unrestricted, non-commercial use, distribution and reproduction in any medium, providing that the work is properly cited.
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Applied economics
Econometrics