Does Sovereign Debt Weaken Economic Growth? A Panel VAR Analysis
12 Pages Posted: 22 Jul 2014
Date Written: October 2013
Abstract
We estimate panel vector autoregressions to analyze the highly disputed relationship between sovereign debt and economic growth. Using data on 20 developed countries, we find no evidence for a robust effect of debt on growth, even for higher levels of debt. We do find a significant negative reverse effect of growth on debt, which explains the negative correlation.
Keywords: Public debt, Debt share, GDP growth
JEL Classification: H63, O43, C33
Suggested Citation: Suggested Citation
Lof, Matthijs and Malinen, Tuomas, Does Sovereign Debt Weaken Economic Growth? A Panel VAR Analysis (October 2013). Economics Letters, Vol. 122, No. 3, 2014, Available at SSRN: https://ssrn.com/abstract=2469159
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