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Public debt and economic growth in advanced economies: A survey

There is no simple relationship between debt and growth […] There are many factors that matter for a country’s growth and debt performance. Moreover, there is no single threshold for debt ratios that can delineate the “bad” from the “good”.

(International Monetary Fund, 2012, p. 9)


This paper surveys the recent literature on the links between public debt and economic growth in advanced economies. We find that theoretical models yield ambiguous results. Whether high levels of public debt have a negative effect on long-run growth is thus an empirical question. While many papers have found a negative correlation between debt and growth, our reading of the empirical literature is that there is no paper that can make a strong case for a causal relationship going from debt to economic growth. We also find that the presence of thresholds and, more in general, of a non-monotone relationship between debt and growth is not robust to small changes in data coverage and empirical techniques. We conclude with a discussion of the challenges involved in measuring and defining public debt and some suggestions for future research which, in our view, should emphasize cross-country heterogeneity.


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Correspondence to Ugo Panizza.

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This paper was prepared for a special issue of the Swiss Journal of Economics and Statistics. We would like to thank the editor, Professor Klaus Neusser, for inviting us to write the paper and participants at the conference “The Swiss Debt Brake — Ten Years On” at the Gerzensee Study Center for helpful comments and suggestions. The usual caveats apply.

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Panizza, U., Presbitero, A.F. Public debt and economic growth in advanced economies: A survey. Swiss J Economics Statistics 149, 175–204 (2013).

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