IDEAS home Printed from
   My bibliography  Save this article

Growth in the shadow of debt


  • Lim, Jamus Jerome


This paper revisits the relationship between debt and growth from a vantage point that considers the totality of private and public debt. We exploit quarter-long timing lags inherent in the response of borrowing to innovations in output to identify the effects of debt on growth in a panel vector autoregressive model. We verify that debt accumulation is negatively related to output growth, with a one standard deviation innovation in the former leading to a 0.2 percentage-point contraction in the latter. This result is robust to the inclusion of exogenous variables in the system, alternative measures of the endogenous variables, and varying temporal treatments. We also find variations depending on the type of debt accumulated, the specific subset of countries considered, and the channels along which debt expansion operates.

Suggested Citation

  • Lim, Jamus Jerome, 2019. "Growth in the shadow of debt," Journal of Banking & Finance, Elsevier, vol. 103(C), pages 98-112.
  • Handle: RePEc:eee:jbfina:v:103:y:2019:i:c:p:98-112
    DOI: 10.1016/j.jbankfin.2019.04.002

    Download full text from publisher

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item


    Economic growth; Total debt; Panel VAR;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbfina:v:103:y:2019:i:c:p:98-112. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Haili He). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.