The Relationship between Public Debt and Economic Growth in Advanced, Emerging and Developing Economies : Differences and Determining Factors

We examine the dynamic heterogeneous link between public debt and economic growth, using a sample that comprises 115 advanced, emerging and developing economies during 1995-2016 by applying an extension of the GFE method (Bonhomme and Manresa, 2015b). Our goal is to explore how the relationship differs over time between groups of countries and which variables might explain it. Our results indicate that the likelihood of a strong impact is mitigated by the quality of a country’s institutions but intensified by the global level of indebtedness, the maturity of the debt, and the type of expenditure that is funded with debt