Public debt and growth in Asian developing economies: evidence of non-linearity and geographical heterogeneity

IF 2.5 Q2 ECONOMICS

Eurasian Economic Review Pub Date : 2024-02-18 DOI:10.1007/s40822-023-00259-3

Gan-Ochir Doojav, Munkhbayar Baatarkhuu

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Abstract

This paper examines the nonlinear effects of public debt on economic growth in Asian developing economies through the application of panel Generalized Method of Moments (GMM) regressions and panel vector autoregression (VAR) models. Our analysis reveals a statistically significant nonlinear (i.e., an inverted U-shape) relationship between public debt (as a percentage of GDP) and GDP per capita growth. The turning points are identified at 52 percent for all Asian developing economies and 50 percent for Asian coastal developing economies. Asymmetric mutual feedback effects are observed between economic growth and public debt, contingent on the level of public debt. These two-way effects are both statistically significant and more pronounced when public debt surpasses its threshold level. Additionally, our results unveil geographical (cross-country) heterogeneity in the mutual feedback effects. These findings carry significant policy implications, emphasizing the necessity of employing region-specific debt threshold levels and asymmetric response coefficients in the analysis of public debt policies.

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亚洲发展中经济体的公共债务与增长：非线性和地域异质性的证据

本文通过应用面板广义矩法（GMM）回归和面板向量自回归（VAR）模型，研究了公共债务对亚洲发展中经济体经济增长的非线性影响。我们的分析表明，公共债务（占 GDP 的百分比）与人均 GDP 增长之间存在统计意义上的非线性（即倒 U 型）关系。所有亚洲发展中经济体的转折点为 52%，亚洲沿海发展中经济体的转折点为 50%。经济增长与公共债务之间存在不对称的相互反馈效应，取决于公共债务的水平。当公共债务超过临界水平时，这些双向效应在统计上都是显著的，而且更加明显。此外，我们的结果揭示了相互反馈效应的地域（跨国）异质性。这些发现具有重要的政策含义，强调了在分析公共债务政策时采用特定地区债务门槛水平和非对称响应系数的必要性。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Eurasian Economic Review ECONOMICS-

CiteScore

6.00

自引率

2.90%

发文量

期刊介绍： The mission of Eurasian Economic Review is to publish peer-reviewed empirical research papers that test, extend, or build theory and contribute to practice. All empirical methods - including, but not limited to, qualitative, quantitative, field, laboratory, and any combination of methods - are welcome. Empirical, theoretical and methodological articles from all fields of finance and applied macroeconomics are featured in the journal. Theoretical and/or review articles that integrate existing bodies of research and that provide new insights into the field are highly encouraged. The journal has a broad scope, addressing such issues as: financial systems and regulation, corporate and start-up finance, macro and sustainable finance, finance and innovation, consumer finance, public policies on financial markets within local, regional, national and international contexts, money and banking, and the interface of labor and financial economics. The macroeconomics coverage includes topics from monetary economics, labor economics, international economics and development economics. Eurasian Economic Review is published quarterly. To be published in Eurasian Economic Review, a manuscript must make strong empirical and/or theoretical contributions and highlight the significance of those contributions to our field. Consequently, preference is given to submissions that test, extend, or build strong theoretical frameworks while empirically examining issues with high importance for theory and practice. Eurasian Economic Review is not tied to any national context. Although it focuses on Europe and Asia, all papers from related fields on any region or country are highly encouraged. Single country studies, cross-country or regional studies can be submitted.