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Is There a Threshold Effect of Public Debt on Economic Growth?

Is There a Threshold Effect of Public Debt on Economic Growth?

Seher Gulsah Topuz, Taner Sekmen
Copyright: © 2019 |Pages: 16
ISBN13: 9781522575641|ISBN10: 1522575642|EISBN13: 9781522575658
DOI: 10.4018/978-1-5225-7564-1.ch003
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MLA

Topuz, Seher Gulsah, and Taner Sekmen. "Is There a Threshold Effect of Public Debt on Economic Growth?." Global Challenges in Public Finance and International Relations, edited by Deniz Şahin Duran, et al., IGI Global, 2019, pp. 49-64. https://doi.org/10.4018/978-1-5225-7564-1.ch003

APA

Topuz, S. G. & Sekmen, T. (2019). Is There a Threshold Effect of Public Debt on Economic Growth?. In D. Şahin Duran, Y. Temür, & D. Bozdoğan (Eds.), Global Challenges in Public Finance and International Relations (pp. 49-64). IGI Global. https://doi.org/10.4018/978-1-5225-7564-1.ch003

Chicago

Topuz, Seher Gulsah, and Taner Sekmen. "Is There a Threshold Effect of Public Debt on Economic Growth?." In Global Challenges in Public Finance and International Relations, edited by Deniz Şahin Duran, Yusuf Temür, and Doğan Bozdoğan, 49-64. Hershey, PA: IGI Global, 2019. https://doi.org/10.4018/978-1-5225-7564-1.ch003

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Abstract

In this chapter, the relationship between public debt and economic growth is examined for OECD countries. In order to determine this relationship, the data between 2002 and 2016 is analyzed using panel threshold regression methods. The findings of the study suggest that the relationship between public debt and economic growth is linear. The public debt threshold is estimated at 99.75% for OECD countries but it is statistically insignificant. While the public debt to GDP ratio is both below and above this threshold, the effect of public debt on economic growth is negative and statistically significant. There is no evidence of the existence of a non-linear relationship between public debt and economic growth. These findings are expected to guide policymakers in the implementation of fiscal policies.

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