IDEAS home Printed from https://ideas.repec.org/a/prg/jnlpep/v2023y2023i2id825p107-128.html
   My bibliography  Save this article

Non-linear Impacts of Public Debt on Growth, Investment and Credit: A Dynamic Panel Threshold Approach

Author

Listed:
  • Taner Turan
  • Pelin Varol Iyidogan

Abstract

This paper examines the effects of public debt on the growth rate, investment and domestic credit provided to private sector using the dynamic panel threshold regression method for a large number of developing countries, namely 53 (48) economies for growth and invest-ment (credit) regressions. Our results suggest that public debt does not have a significant impact on the economic growth rate. Despite a strong negative effect of public debt on the total investment, our results do not support the existence of a (strong) threshold effect of public debt on total (private) investment. On the other hand, we present evidence for a threshold effect of public debt on public investment and credit. More precisely, public debt leads to a reduction in public investment and credit when the public debt exceeds the estimated threshold levels. Since public debt matters for investment and credit, it is important to ensure fiscal discipline and prudence in the long term.

Suggested Citation

  • Taner Turan & Pelin Varol Iyidogan, 2023. "Non-linear Impacts of Public Debt on Growth, Investment and Credit: A Dynamic Panel Threshold Approach," Prague Economic Papers, Prague University of Economics and Business, vol. 2023(2), pages 107-128.
    • Handle: RePEc:prg:jnlpep:v:2023:y:2023:i:2:id:825:p:107-128
    DOI: 10.18267/j.pep.825
    as

    Download full text from publisher

    File URL: http://pep.vse.cz/doi/10.18267/j.pep.825.html
    Download Restriction: free of charge
    File URL: http://pep.vse.cz/doi/10.18267/j.pep.825.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.18267/j.pep.825?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

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

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oguzhan Bozatli & Seref Can Serin & Murat Demir, 2024. "The causal relationship between public debt and economic growth in G7 countries: new evidence from time and frequency domain approaches," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-27, June.

    More about this item

    Keywords

    Public debt; growth; investment; domestic credit; dynamic panel threshold;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    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:prg:jnlpep:v:2023:y:2023:i:2:id:825:p:107-128. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.