Myth or Reality (Egert)

Public debt, economic growth and nonlinear effects – Myth or reality? by Balázs Egert published by OECD (10/2012) indicated by Arthur Garbayo. “The economics profession seems to increasingly endorse the existence of a strongly negative nonlinear effect of public debt on economic growth…We show that when non-linearity is detected, the negative nonlinear effect kicks in at much lower levels of public debt (between 20% and 60% of GDP). These results, based on bivariate regressions on secular time series, are largely confirmed on a shorter dataset (1960-2010) when using a multivariate growth framework that accounts for traditional drivers of long-term economic growth and model uncertainty.”