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Un réexamen de la relation non linéaire entre déficits budgétaires et croissance économique

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  • Alexandru Minea
  • Patrick Villieu

Abstract

We propose a simple theoretical model showing the existence of non-linear effects of fiscal deficits on economic growth, depending on the public debt to gdp ratio. For low debt values, raising deficit is growth increasing, as the debt burden raise may be absorbed by a decrease in government consumption. When public debt is high, government can no longer reduce public consumption, and productive spending must negatively adjust, therefore raising deficits becomes growth-reducing. We aim confirming the robustness of our results in an empirical analysis using data from 19 oecd countries. Estimations exhibit the existence of a non-linear effect of fiscal deficits on economic growth, depending on the public debt ratio. Classification JEL : H62, H63, E62

Suggested Citation

  • Alexandru Minea & Patrick Villieu, 2008. "Un réexamen de la relation non linéaire entre déficits budgétaires et croissance économique," Revue économique, Presses de Sciences-Po, vol. 59(3), pages 561-570.
  • Handle: RePEc:cai:recosp:reco_593_0561
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    References listed on IDEAS

    as
    1. Feldstein, Martin, 1982. "Government deficits and aggregate demand," Journal of Monetary Economics, Elsevier, vol. 9(1), pages 1-20.
    2. Alexandru Minea & Patrick Villieu, 2005. "Persistent Deficit, Growth and Indeterminacy: the GRPF Revisited," Post-Print halshs-00261157, HAL.
    3. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
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    5. Alexandru Minea & Patrick Villieu, 2008. "Faut-il financer l'investissement public par emprunt ?. Les enseignements d'un modèle de croissance endogène," Revue économique, Presses de Sciences-Po, vol. 59(1), pages 5-32.
    6. Andrés González & Timo Teräsvirta & Dick van Dijk & Yukai Yang, 1910. "Panel Smooth Transition Regression Models," CREATES Research Papers 2017-36, Department of Economics and Business Economics, Aarhus University.
    7. Hansen, Bruce E., 1999. "Threshold effects in non-dynamic panels: Estimation, testing, and inference," Journal of Econometrics, Elsevier, vol. 93(2), pages 345-368, December.
    8. Alexandru Minea & Patrick Villieu, 2005. "Persistent Deficit, Growth and Indeterminacy: the GRPF Revisited," Post-Print halshs-00261157, HAL.
    9. Alexandru Minea & Patrick Villieu, 2005. "Persistent Deficit, Growth and Indeterminacy: the GRPF Revisited," Post-Print halshs-00261157, HAL.
    10. Bertola, Giuseppe & Drazen, Allan, 1993. "Trigger Points and Budget Cuts: Explaining the Effects of Fiscal Austerity," American Economic Review, American Economic Association, vol. 83(1), pages 11-26, March.
    11. Giavazzi, Francesco & Jappelli, Tullio & Pagano, Marco, 2000. "Searching for non-linear effects of fiscal policy: Evidence from industrial and developing countries," European Economic Review, Elsevier, vol. 44(7), pages 1259-1289, June.
    12. Alexandru Minea & Patrick Villieu, 2005. "Persistent Deficit, Growth and Indeterminacy: the GRPF Revisited," Post-Print halshs-00261157, HAL.
    13. Gilbert Colletaz & Christophe Hurlin, 2006. "Threshold Effects in the Public Capital Productivity: an International Panel Smooth Transition Approach," Post-Print halshs-00257487, HAL.
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    15. Robert J. Barro & Xavier Sala-I-Martin, 1992. "Public Finance in Models of Economic Growth," Review of Economic Studies, Oxford University Press, vol. 59(4), pages 645-661.
    16. Alexandru Minea & Patrick Villieu, 2005. "Persistent Deficit, Growth and Indeterminacy: the GRPF Revisited," Post-Print halshs-00261157, HAL.
    17. Futagami, Koichi & Iwaisako, Tatsuro & Ohdoi, Ryoji, 2008. "Debt Policy Rule, Productive Government Spending, And Multiple Growth Paths," Macroeconomic Dynamics, Cambridge University Press, vol. 12(04), pages 445-462, September.
    18. Alexandru Minea & Patrick Villieu, 2005. "Persistent Deficit, Growth and Indeterminacy: the GRPF Revisited," Post-Print halshs-00261157, HAL.
    19. Gilbert Colletaz & Christophe Hurlin, 2006. "Threshold Effects of the Public Capital Productivity : An International Panel Smooth Transition Approach," Working Papers halshs-00008056, HAL.
    20. Sutherland, Alan, 1997. "Fiscal crises and aggregate demand: can high public debt reverse the effects of fiscal policy?," Journal of Public Economics, Elsevier, vol. 65(2), pages 147-162, August.
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    1. repec:asi:ajemod:2017:p:223-232 is not listed on IDEAS
    2. Wissem Khanfir, 2016. "Threshold effect of fiscal policy on private consumption : Evidence from Tunisia," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 18(59), pages 95-110, March.
    3. Eggoh C. Jude, 2010. "Financial Development And Growth: A Panel Smooth Regression Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(1), pages 15-33, March.

    More about this item

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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