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Economic Growth and Public Debt Threshold: New Evidence from An Emerging Economy

Lucas Sagire|Peter W. Muriu
경제연구소 (Hanyang Economic Research Institute)|2021.12|Journal of Economic Development|제46권 제4호|pp. 105-120|DOI 10.35866/caujed.2021.46.4.005

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참고문헌

키워드

Economic GrowthPublic DebtThreshold RegressionStatistical Loss Functions
주제분류경제학

초록

The threshold beyond which debt accumulation hinders economic growth in Kenya has not been established. This paper sought to investigate whether a threshold exists in the country’s debt level and its influence on economic growth beyond the threshold. Using annual data from 1980 to 2018, threshold regression technique and statistical loss functions, we found out that there exists a debt-to-GDP threshold of 55.5%. Beyond the threshold, a 10% increase in debt leads to a 1.4% decline in growth. As such, during periods of high debt, policymakers may have to rely on robust economic growth to ensure debt sustainability.

Abstract

The threshold beyond which debt accumulation hinders economic growth in Kenya has not been established. This paper sought to investigate whether a threshold exists in the country’s debt level and its influence on economic growth beyond the threshold. Using annual data from 1980 to 2018, threshold regression technique and statistical loss functions, we found out that there exists a debt-to-GDP threshold of 55.5%. Beyond the threshold, a 10% increase in debt leads to a 1.4% decline in growth. As such, during periods of high debt, policymakers may have to rely on robust economic growth to ensure debt sustainability.

참고문헌 (35)

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