Vai al contenuto principale

ISSN 2385-2275 No. 28 - September 2017

The Impact of Government Debt on Economic Growth: An Overview for Latin America

Alejandro D. Jacobo
Instituto de Economía y Finanzas (IEF) and Department of Economics, Universidad Nacional de Córdoba (Argentina) 
Ileana R. Jalile
Instituto de Economía y Finanzas (IEF) and Department of Economics, Universidad Nacional de Córdoba (Argentina) 

Abstract

This paper investigates the impact of government debt on GDP in 16 Latin American economies, namely Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela over a period of about fifty years (1960-2015). The short-run impact of debt on GDP growth is positive, but decreases to close to zero beyond public debt-to-GDP ratios between 64 and 71% (i.e. up to this threshold, additional debt has a stimulating impact on growth). The institutional variable selected shows the expected sign suggesting that countries with democratic governments exhibit higher growth rates.

 

JEL Classification: H63, O40

Keywords: Debt, growth

Download Full text pdf

Vai a inizio pagina
Sommario