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Debt-Growth Nexus and Latin America

Author

Listed:
  • Jacobo Alejandro D.

    (Instituto de Economía y Finanzas (FCE) and CICE (CIECS-CONICET), Universidad Nacional de Córdoba, Blvd. Enrique Barros s/n, Córdoba, 5000, Argentina)

  • Ramos-Herrera María del Carmen

    (Departamento de Economía, Universidad de Alcalá, Alcala de Henares, Community of Madrid, Spain)

Abstract

Using a panel ARDL approach, we novelty explore the debt-growth nexus for 16 Latin American countries during 40 years whereas accounting for the bi-directional causality. We find that public debt temporarily boosts economic growth but discourages it in the long-run. While the gross capital formation contributes to economic growth in both the short- and the long-run, the degree of openness of the economy only impacts in the long-run. A higher inflation rate erodes economic growth at all times whereas population does so in the long-run. Our findings suggest a bidirectional causality between debt and economic growth.

Suggested Citation

  • Jacobo Alejandro D. & Ramos-Herrera María del Carmen, 2025. "Debt-Growth Nexus and Latin America," Review of Economics, De Gruyter, vol. 76(2), pages 165-177.
    • Handle: RePEc:lus:reveco:v:76:y:2025:i:2:p:165-177:n:1003
    DOI: 10.1515/roe-2025-0008
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    Keywords

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    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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