Prague Economic Papers 2023, 32(2):107-128 | DOI: 10.18267/j.pep.825

Non-linear Impacts of Public Debt on Growth, Investment and Credit: A Dynamic Panel Threshold Approach

Taner Turan ORCID...a, Pelin Varol Iyidogan ORCID...b
a Gebze Technical University, Department of Economics, Kocaeli, Turkey
b Hacettepe University, Department of Public Finance, Ankara, Turkey

This paper examines the effects of public debt on the growth rate, investment and domestic credit provided to private sector using the dynamic panel threshold regression method for a large number of developing countries, namely 53 (48) economies for growth and invest-ment (credit) regressions. Our results suggest that public debt does not have a significant impact on the economic growth rate. Despite a strong negative effect of public debt on the total investment, our results do not support the existence of a (strong) threshold effect of public debt on total (private) investment. On the other hand, we present evidence for a threshold effect of public debt on public investment and credit. More precisely, public debt leads to a reduction in public investment and credit when the public debt exceeds the estimated threshold levels. Since public debt matters for investment and credit, it is important to ensure fiscal discipline and prudence in the long term.

Klíčová slova: Public debt, growth, investment, domestic credit, dynamic panel threshold
JEL classification: E62, H60, O40

Vloženo: 18. prosinec 2021; Revidováno: 23. leden 2023; Přijato: 10. únor 2023; Zveřejněno: 26. duben 2023  Zobrazit citaci

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Turan, T., & Iyidogan, P.V. (2023). Non-linear Impacts of Public Debt on Growth, Investment and Credit: A Dynamic Panel Threshold Approach. Prague Economic Papers, 32(2), 107-128. doi: 10.18267/j.pep.825
Stáhnout citaci
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Zobrazit celý článek

    Reference

    1. Acemoglu, D., Johnson, S., Robinson, J. A. (2001). The Colonial Origins of Comparative Development: An Empirical Investigation. American Economic Review, 91(5), 1369-1401. http://www.jstor.org/stable/41724682 Přejít k původnímu zdroji...
    2. Ahlborn, M., Schweickert, R. (2018). Public debt and economic growth-Economic systems matter. International Economics & Economic Policy, 15, 373-403 https://doi.org/10.1007/s10368-017-0396-0 Přejít k původnímu zdroji...
    3. Afonso, A., Jalles, J. T. (2013). Growth and productivity: The role of government debt. International Review of Economics and Finance, 25, 384-407. https://doi.org/10.1016/j.iref.2012.07.004 Přejít k původnímu zdroji...
    4. Afonso, A., Alves, J. (2015). The role of government debt in economic growth. Review of Public Economics, 215, 9-26. https://doi/org/10.7866/HPE-RPE.15.4.1
    5. Alesina, A., Perotti, R. (1997). Fiscal adjustments in OECD countries: Composition and macroeconomic effects. IMF Staff Papers, 44(2): 210-248. https://doi.org/10.2307/3867543 Přejít k původnímu zdroji...
    6. Aizenman, J., Kletzer K., Pinto, B. (2007). Economic growth with constrains on tax revenues and public debt: Implications for fiscal policy and cross-country differences. NBER Working Paper No.12750. https://doi/10.3386/w12750 Přejít k původnímu zdroji...
    7. Anyanwu, A., Gan C., Hu, B. (2017). Government domestic debt, private sector credit, and crowding out effect in oil-dependent countries. Journal of Economic Research, 22, 127-151. https://dx.doi.org/10.2139/ssrn.3214288 Přejít k původnímu zdroji...
    8. Arcabic, V., Tica, J., Lee, J., Sonora, R. J. (2018). Public debt and economic growth conundrum: nonlinearity and inter-temporal relationship. Studies in Nonlinear Dynamics & Econometrics, 22(1), pp. 20160086. https://doi.org/10.1515/snde-2016-0086 Přejít k původnímu zdroji...
    9. Arellano, M., Bover, O. (1995). Another look at the instrumental variable estimation of errorcomponents models. Journal of Econometrics, 68(1), 29-51. https://doi.org/10.1016/0304-4076(94)01642-D Přejít k původnímu zdroji...
    10. Asteriou, D., Pilbeam, K., Pratiwi, C. E. (2021). Public debt and economic growth: panel data evidence for Asian countries. Journal of Economics and Finance, 45, 270-287. https://doi.org/10.1007/s12197-020-09515-7 Přejít k původnímu zdroji...
    11. Barro, R. J. (1974). Are government bonds net wealth? Journal of Political Economy, 82(6), 1095-1117. https://doi.org/10.1086/260266 Přejít k původnímu zdroji...
    12. Barro, R. J. (1979). On the determination of the public debt. Journal of Political Economy, 87(5), 940-971. https://doi.org/10.1086/260807 Přejít k původnímu zdroji...
    13. Bansal, B., Sharma, G. D., Rahman, M. M., Yadav, A., Garg, I. (2021). Nexus between environmental, social and economic development in South Asia: evidence from econometric models. Heliyon, 7(1), 1-10. https://doi.org/10.1016/j.heliyon.2021.e05965 Přejít k původnímu zdroji...
    14. Baum, A., Checherita-Westphal, C., Rother, P. (2013). Debt and growth: New evidence for the Euro Area. Journal of Money and International Finance, 32., 809-821 https://doi.org/10.1016/j.jimonfin.2012.07.004 Přejít k původnímu zdroji...
    15. Benayed, W., Gabsi, F. B., Belguith, S. O. (2015). Threshold effect of public debt on domestic investment: Evidence from selected African countries. Theoretical and Applied Economics, 22 (4), 189-198. http://store.ectap.ro/articole/1144.pdf
    16. Bentour, E. M. (2021). On the public debt and growth threshold: one size does not necessarily fit all. Applied Economics, 53(11), 1280-1299. https://doi.org/10.1080/00036846.2020.1828806 Přejít k původnímu zdroji...
    17. Bloom, N. (2020). Population 2020. Finance & Development, 57(1), 5-9. https://www.imf.org/en/Publications/fandd/issues/2020/03/changing-demographics-and-economic-growth-bloom
    18. Brida, J. G., Gomez, D. M, Seijas, M. N. (2017). Debt and growth: A non-parametric approach. Physica A: Statistical Mechanics and Its Applications, 486, 883-894 https://doi.org/10.1016/j.physa.2017.05.060 Přejít k původnímu zdroji...
    19. Burnside, C., Eichenbaum, M., Rebelo, S. (2001). On the fiscal implications of twin crises. NBER Working Paper No. 8277. https://doi/.org/10.3386/w8277. Přejít k původnímu zdroji...
    20. Caner, M., Hansen, B. E. (2004). Instrumental variable estimation of a threshold model. Econometric Theory, 20, 813-843. https://doi:10.1017/S0266466604205011 Přejít k původnímu zdroji...
    21. Caner, M., Grennes, T., Koehler-Geib, F. (2010). Finding the tipping point: When sovereign debt turns bad. World Bank Policy Research Working Paper 5391. http://documents.worldbank.org/curated/en/509771468337915456/Finding-the-tipping-point-when-sovereign-debt-turns-bad Přejít k původnímu zdroji...
    22. Cecchetti, S. C., Mohanty, M. S., Zampolli, F. (2011). The real effects of debt. BIS Working Papers 352. https://www.bis.org/publ/work352.pdf
    23. Checherita-Westphal, C. D., Hallett, A. H., Rother, P. C. (2012). Fiscal sustainability using growth maximising debt targets. ECB Working Paper Series No.1472 https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1472.pdf Přejít k původnímu zdroji...
    24. Checherita, C., Rother, P. (2012). The impact of high and growing government debt on economic growth: An empirical investigation for the Euro Area. European Economic Review, 56(7), 1392-1405. https://doi.org/10.1016/j.euroecorev.2012.06.007 Přejít k původnímu zdroji...
    25. Chudik, A., Mohaddes, K., Pesaran, M. H., Raissi, M. (2017). Is there a debt-threshold effect on output growth? Review of Economics and Statistics, 99(1), 135-150. https://doi.org/10.1162/REST_a_00593 Přejít k původnímu zdroji...
    26. Cochrane, J. (2011). Understanding policy in the great recession: Some unpleasant fiscal arithmetic. European Economic Review, 55(1), 2-30. https://doi.org/10.1016/j.euroecorev.2010.11.002 Přejít k původnímu zdroji...
    27. Corsetti, G., Kuester, K., Meier, A., Müller, G. (2013). Sovereign risk, fiscal policy, and macroeconomic stability. The Economic Journal, 123(566), F99-F132. https://doi.org/10.1111/ecoj.12013 Přejít k původnímu zdroji...
    28. Cottarelli, C., Dell'Arricia, G., Vladkova-Hollar, I. (2005). Early birds, late risers, and sleeping beauties: Bank credit growth to the private sector in Central and Eastern Europe and in the Balkans. Journal of Banking & Finance, 29(1), 83-104. https://doi.org/10.1016/j.jbankfin.2004.06.017 Přejít k původnímu zdroji...
    29. Hauner, D. (2009). Public debt and financial development. Journal of Development Economics, 88(1), 171-183. https://doi.org/10.1016/j.jdeveco.2008.02.004 Přejít k původnímu zdroji...
    30. DeLong, J. B., Summers, L. H. (2012). Fiscal policy in a depressed economy. Brookings Papers on Economic Activity 233-274, https://www.brookings.edu/wp-content/uploads/2012/03/2012a_delong.pdf Přejít k původnímu zdroji...
    31. de Soyres, C., Kawai, R., Wang, M. (2022). Public Debt and Real GDP: Revisiting the Impact. IMF Working Paper WP/22/76, Washington DC: International Monetary Fund. https://www.imf.org/en/Publications/WP/Issues/2022/04/29/Public-Debt-and-Real-GDP-Revisiting-the-Impact-517449 Přejít k původnímu zdroji...
    32. Easterly, W. (2019). In Search of Reforms for Growth: New Stylized Facts on Policy and Growth Outcomes. NBER Working Papers, 26318. https://doi/10.3386/w26318 Přejít k původnímu zdroji...
    33. Eberhardt, M., Presbitero, A. F. (2015). Public debt and growth: Heterogeneity and non-linearity. Journal of International Economics 97(1), 45-58 https://doi.org/10.1016/j.jinteco.2015.04.005 Přejít k původnímu zdroji...
    34. Egert, B. (2015) Public debt, economic growth and nonlinear effects: Myth or reality? Journal of Macroeconomics, 43, 226-238. https://doi.org/10.1016/j.jmacro.2014.11.006 Přejít k původnímu zdroji...
    35. Egert, B., Backe, P., Zumer, T. (2006). Credit growth in Central and Eastern Europe. ECB Working Series No. 687. https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp687.pdf Přejít k původnímu zdroji...
    36. Eichengreen, B., Hausmann, R., Panizza, U. (2007). Currency mismatches, debt intolerance, and the original sin: Why they are not the same and why it matters, in Edwards, S., ed., Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences. University of Chicago Press, pp.121-164. Přejít k původnímu zdroji...
    37. Elmendorf, D.W., Mankiw, N. G. (1999). Government debt, in Taylor, J. B., Woodford. M., ed., Handbook of Macroeconomics, Elsevier, 1615-1669. Přejít k původnímu zdroji...
    38. Fincke, B., Greiner, A. (2014). Public debt and economic growth in Emerging Market Economies. Bielefeld University Working Papers in Economics and Management No. 08. https://dx.doi.org/10.2139/ssrn.2449222 Přejít k původnímu zdroji...
    39. Feenstra, R. C., Inklaar, R., Timmer, M. P. (2015). The next generation of the Penn World Table. American Economic Review, 105(10), 3150-82. https://doi/10.1257/aer.20130954 Přejít k původnímu zdroji...
    40. Gómez-Puig, M., Sosvilla-Rivero, S. (2015). On the bi-directional causal relationship between public debt and economic growth in EMU Countries. Research Institute of Applied Economics Working Paper, 12. https://www.ub.edu/irea/working_papers/2015/201512.pdf Přejít k původnímu zdroji...
    41. Ghourchian, S., Yilmazkuday, H. (2020). Government consumption, government debt and economic growth. Review of Development Economics, 24(2), 589-605. https://doi.org/10.1111/rode.12661 Přejít k původnímu zdroji...
    42. Greiner, A. (2013). Debt and growth: Is there a non-monotonic relation? Economics Bulletin, 33(1), 340-347. http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I1-P33.pdf
    43. Hansen, B. E. (1999). Threshold effects in non-dynamic panels: estimation, testing, and inference. Journal of Econometrics, 93(2), 345-368. https://doi.org/10.1016/S0304-4076(99)00025-1 Přejít k původnímu zdroji...
    44. Heimberger, P. (2021). Do Higher Public Debt Levels Reduce Economic Growth? The Vienna Institute for International Economic Studies Working Paper 211. https://wiiw.ac.at/do-higher-public-debt-levels-reduce-economic-growth-dlp-5976.pdf Přejít k původnímu zdroji...
    45. Hemming, R., Kell, M., Schimmelpfennig, A. (2003). Fiscal vulnerability and financial crises in Emerging Market Economies. IMF Occasional Paper No. 216 https://www.imf.org/external/pubs/nft/op/218/index.htm Přejít k původnímu zdroji...
    46. Herndon, T., Ash, M., Pollin, R. (2014). Does high public debt consistently stifle economic growth? A Critique of Reinhart and Rogoff. Cambridge Journal of Economics, 38(2), 257-279. https://doi:10.1093/cje/bet075 Přejít k původnímu zdroji...
    47. International Monetary Fund. (2020). Investment and capital stock dataset and historical public debt database. Washington: IMF. https://www.imf.org/external/datamapper/datasets/DEBT
    48. Karadam, D. Y. (2018). An investigation of nonlinear effects of debt on growth. The Journal of Economic Asymmetries, 18, e00097. https://doi.org/10.1016/j.jeca.2018.e00097 Přejít k původnímu zdroji...
    49. Kobayashi, K. (2015). Public debt overhang and economic growth. Public Policy Review, 11(2), 247-275. https://warp.da.ndl.go.jp/info:ndljp/pid/11217434/www.mof.go.jp/english/pri/publication/pp_review/ppr028/ppr028b.pdf
    50. Kremer, S., Bick, A., Nautz, D. (2013). Inflation and growth: New evidence from a dynamic panel threshold analysis. Empirical Economics, 44, 861-878. https://doi.org/10.1007/s00181-012-0553-9 Přejít k původnímu zdroji...
    51. Krugman, P. (1988). Financing vs. forgiving a debt overhang. NBER Working Paper No. 2486. https://www.nber.org/system/files/working_papers/w2486/w2486.pdf Přejít k původnímu zdroji...
    52. Kumhof, M., Tanner, E. (2005). Government debt: A key role in financial intermediation. IMF Working Paper Series WP/05/57. https://www.imf.org/-/media/Websites/IMF/imported-full-text-pdf/external/pubs/ft/wp/2005/_wp0557.ashx Přejít k původnímu zdroji...
    53. Law, S. H., Ng, H., Kutan, A., Law, Z. (2021). Public debt and economic growth in developing countries: Nonlinearity and threshold analysis. Economic Modelling, 98, 26-40. https://doi.org/10.1016/j.econmod.2021.02.004 Přejít k původnímu zdroji...
    54. Lof, M., Malinen, T. (2014). Does sovereign debt weaken economic growth? A panel VAR analysis. Economics Letters, 122(3), 403-407. https://doi.org/10.1016/j.econlet.2013.12.037 Přejít k původnímu zdroji...
    55. Marshall, M. G., Gurr, T. R., Jaggers, K. (2017). Polity IV project: Political regime characteristics and transitions, 1800-2016. Center for Systemic Peace. https://www.systemicpeace.org/polity/polity4.htm
    56. Mensah, L., Allotey, D., Sarpong-Kumankoma, E., Coffie, W. (2020). What debt threshold hampers economic growth in Africa? International Journal of Development Issues, 19(1), 25-42. https://doi.org/10.1108/IJDI-03-2019-0056 Přejít k původnímu zdroji...
    57. Ncanywa, T., Masoga, M. M. (2018). Can public debt stimulate public investment and economic growth in South Africa? Cogent Economics & Finance, 6(1), 1516483 https://doi.org/10.1080/23322039.2018.1516483 Přejít k původnímu zdroji...
    58. Jacobs J, Ogawa K, Sterken E, Tokutsu I (2020) Public debt, economic growth and the real interest rate: A panel VAR approach to EU and OECD countries. Applied Economics, 52(12), 1377-1394. https://doi.org/10.1080/00036846.2019.1673301 Přejít k původnímu zdroji...
    59. Jones, C. (2015). The Facts of Economic Growth. NBER Working Papers No., 21142. https://doi.org/10.3386/w21142 Přejít k původnímu zdroji...
    60. Onofrei, M., Bostan, I., Firtescu, B. N., Roman, A., Rusu, V. D. (2022). Public Debt and Economic Growth in EU Countries. Economies 10(10), 254. https://doi.org/10.3390/economies10100254 Přejít k původnímu zdroji...
    61. Owusu-Nantwi, V., Erickson, C. (2016). Public debt and economic growth in Ghana. African Development Review, 28(1), 116-126. https://doi.org/10.1111/1467-8268.12174 Přejít k původnímu zdroji...
    62. Panizza, U., Presbitero, A. F. (2013). Public debt and economic growth in advanced economies: A survey. Swiss J Economics Statistics, 149, 175-204 https://doi.org/10.1007/BF03399388 Přejít k původnímu zdroji...
    63. Panizza, U., Presbitero, A. F. (2014). Public debt and economic growth: Is there a causal effect? Journal of Macroeconomics, 41, 21-41. https://doi.org/10.1016/j.jmacro.2014.03.009 Přejít k původnímu zdroji...
    64. Pegkas, P. (2018). The effect of government debt and other determinants on economic growth:The Greek experience. Economies, 6(1), 10. https://doi.org/10.3390/economies6010010 Přejít k původnímu zdroji...
    65. Pescatori, A., Sandri, D., Simon, J. (2014). Debt and growth: Is there a magic threshold? IMF Working Paper WP/14/34. https://www.imf.org/-/media/Websites/IMF/imported-full-text-pdf/external/pubs/ft/wp/2014/_wp1434.ashx Přejít k původnímu zdroji...
    66. Picarelli, M.O., Vanlaer, W., Marneffe, W. (2019). Does public debt produce a crowding out effect for public investment in the EU? European Stability Mechanism Working Paper No. 36. https://www.esm.europa.eu/system/files/document/wp36final.pdf Přejít k původnímu zdroji...
    67. Rahman, N. H. A., Ismail, S., Ridzuan, A. R. (2019). How does public debt affect economic growth? A systematic review. Cogent Business & Management, 6, 1701339. https://doi.org/10.1080/23311975.2019.1701339 Přejít k původnímu zdroji...
    68. Reinhart, C. M., Reinhart, V., Rogoff, K. S. (2012). Public debt overhangs: Advanced economy episodes since 1800. Journal of Economic Perspectives, 26(3), 69-86. https://doi.org/10.1257/jep.26.3.69 Přejít k původnímu zdroji...
    69. Reinhart, C. M., Rogoff, K. S. (2010). Growth in a time of debt. NBER Working Paper no. 15639 https://www.nber.org/system/files/working_papers/w15639/w15639.pdf Přejít k původnímu zdroji...
    70. Romer, P. (1990). Endogenous Technological Change. Journal of Political Economy, 98(5), 71-102. https://www.jstor.org/stable/2937632 Přejít k původnímu zdroji...
    71. Saint-Paul, G. (1992). Fiscal policy in an endogenous growth model. The Quarterly Journal of Economics,107(4), 1243-1259. https://doi.org/10.2307/2118387. Přejít k původnímu zdroji...
    72. Spilioti, S., Vamvoukas, G. (2015). The impact of government debt on economic growth: An empirical investigation of the Greek market. The Journal of Economic Asymmetries, 12, 34-40 https://doi.org/10.1016/j.jeca.2014.10.001 Přejít k původnímu zdroji...
    73. Swamy, V. (2020). Debt and growth: Decomposing the cause and effect relationship. International Journal of Finance and Economics, 25(2), 141-156 https://doi.org/10.1002/ijfe.1729 Přejít k původnímu zdroji...
    74. Tamborini, R., Tomaselli, M. (2020). When does public debt impair economic growth? A literature review in search of a theory. DEM Working Papers No. 2020/7 https://www.economia.unitn.it/alfresco/download/workspace/SpacesStore/266e0a84-1dfc-44ba-8807-fe7e584c924b/DEM2020_07.pdf
    75. Teles, V. K., Musollini, C. C. (2014). Public debt and the limits of fiscal policy to increase economic growth. European Economic Review, 66, 1-15 https://doi.org/10.1016/j.euroecorev.2013.11.003 Přejít k původnímu zdroji...
    76. Turan, T. (2019). The Effects of Public Debt on Economic Growth: A Cointegration Analysis for Turkey. Maliye Dergisi, 177, 1-27. https://ms.hmb.gov.tr/uploads/2020/03/001-Kamu-Borcunun-Ekonomik-B%C3%BCy%C3%BCme.pdf
    77. Woo, J., Kumar, M. S. (2015). Public debt and growth. Economica, 82, 705-739 https://doi.org/10.1111/ecca.12138 Přejít k původnímu zdroji...
    78. World Bank (2020). World Development Indicators. Washington: World Bank. https://datacatalog.worldbank.org/dataset/world-development-indicators
    79. Xu, D., Abbasi, K. R., Hussain, K., Albaker, A., Almulhim, A. I., Alvarado, R. (2023). Analyzing the factors contribute to achieving sustainable development goals in Pakistan: A novel policy framework. Energy Strategy Reviews, 45, 101050. https://doi.org/10.1016/j.esr.2022.101050 Přejít k původnímu zdroji...
    80. Zheng, L., Abbasi, K. R., Salem, S., Irfan, M., Alvarado, R., Lv, K. (2022). How technological innovation and institutional quality affect sectoral energy consumption in Pakistan? Fresh policy insights from novel econometric approach. Technological Forecasting and Social Change 183, 121900. https://doi.org/10.1016/j.techfore.2022.121900 Přejít k původnímu zdroji...

    Tento článek je publikován v režimu tzv. otevřeného přístupu k vědeckým informacím (Open Access), který je distribuován pod licencí Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), která umožňuje nekomerční distribuci, reprodukci a změny, pokud je původní dílo řádně ocitováno. Není povolena distribuce, reprodukce nebo změna, která není v souladu s podmínkami této licence.


    Zpět na obsah