Public debt and growth Heterogeneity and non-linearity》.pdf

Journal of International Economics 97 (2015) 45 –58 Contents lists available at ScienceDirect Journal of International Economics jour nal homepage: www.e lsevie r. com/ locate/ jie Public debt and growth: Heterogeneity and non-linearity☆ Markus Eberhardt a,b,⁎, Andrea F. Presbitero c,d,⁎⁎ a School of Economics, University of Nottingham, UK b Centre for the Study of African Economies, Department of Economics, University of Oxford, UK c International Monetary Fund, Washington DC, USA d Money and Finance Research group (MoFiR), Ancona, Italy a r t i c l e i n f o a b s t r a c t Article history: We study the long-run relationship between public debt and growth in a large panel of countries. Our analysis builds Received 14 February 2014 on theoretical arguments and data considerations in modelling the debt–growth relationship as heterogeneous Received in revised form 13 March 2015 across countries. We investigate the debt–growth nexus adopting linear and non-linear specifications, employing Accepted 21 April 2015 novel methods and diagnostics from the time-series literature adapted for use in the panel. We find some support Available online 29 April 2015 for a negative relationship between public debt and long-run growth across countries, but no evidence for a similar, let alone common, debt threshold within countries. JEL classifi cation: E62