Public Debt and Growth

35 Pages Posted: 15 Oct 2015

See all articles by Jaejoon Woo

Jaejoon Woo

International Monetary Fund (IMF) - Fiscal Affairs Department

Manmohan Kumar

International Monetary Fund (IMF) - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: October 2015

Abstract

The recent global financial crisis has led to an unprecedented increase in public debt across the world, raising serious concerns about its economic impact. This paper examines the impact of high public debt on long‐run economic growth in a large panel of countries over the last four decades. High initial public debt is found to be significantly associated with slower subsequent growth. Non‐linearities, currency denomination of debt and differences between advanced and emerging market economies are explored. The adverse effect largely reflects a slowdown in labour productivity growth mainly due to slower capital accumulation. Extensive robustness checks confirm the results.

Suggested Citation

Woo, Jaejoon and Kumar, Manmohan, Public Debt and Growth (October 2015). Economica, Vol. 82, Issue 328, pp. 705-739, 2015, Available at SSRN: https://ssrn.com/abstract=2674321 or http://dx.doi.org/10.1111/ecca.12138

Jaejoon Woo (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Manmohan Kumar

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-7771 (Phone)
202-589-7771 (Fax)

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