Re-examining the debt-growth nexusA grouped fixed-effect approach

  1. Marta Gómez-Puig 1
  2. Simón Sosvilla-Rivero 2
  3. Inmaculada Martínez-Zarzoso 3
  1. 1 Universitat de Barcelona
    info

    Universitat de Barcelona

    Barcelona, España

    ROR https://ror.org/021018s57

  2. 2 Universidad Complutense de Madrid
    info

    Universidad Complutense de Madrid

    Madrid, España

    ROR 02p0gd045

  3. 3 University of Göttingen
    info

    University of Göttingen

    Gotinga, Alemania

    ROR https://ror.org/01y9bpm73

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Revista:
Documentos de Trabajo (ICAE)

ISSN: 2341-2356

Año de publicación: 2019

Número: 21

Páginas: 1-46

Tipo: Documento de Trabajo

DIALNET GOOGLE SCHOLAR lock_openDocta Complutense editor

Otras publicaciones en: Documentos de Trabajo (ICAE)

Resumen

This paper uses panel data for 116 countries over the period 1995-2016 to investigate the heterogeneity of the debt-growth nexus across countries and the factors underlying it. In the first step, the grouped fixed effects (GFE) estimator proposed by Bonhomme and Manresa (2015) is used to classify countries into groups, with group membership being endogenously determined. In the second step, a multinomial logit model is used to explore the drivers of the heterogeneity detected, among them the quality of institutions, the composition of debt-funded public expenditure, the relative public and private indebtedness, and the maturity of debt. Finally, the underlying factors explaining the time-varying impact of public debt on growth in the country groups identified is also investigated.

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This paper is based on work supported by the Spanish Ministry of Economy and Competitiveness [grants ECO2016-76203-C2-2-P and ECO2017-83255-C3-3-P (AEI, FEDER, EU)] and from Universitat Jaume I [project UJI-B2017-33].

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