Optimal government investment and public debt in an economic growth model
| Autor: | Yuting Lin, Shujie Yao, Peiwei Hu, Chuanglian Chen |
|---|---|
| Rok vydání: | 2017 |
| Předmět: |
Macroeconomics
Economics and Econometrics 050208 finance 05 social sciences Debt-to-GDP ratio Gross private domestic investment Monetary economics External debt Investment (macroeconomics) 0502 economics and business Economics Debt ratio Internal debt 050207 economics Debt levels and flows Finance Public finance |
| Zdroj: | China Economic Review. 45:257-278 |
| ISSN: | 1043-951X |
| DOI: | 10.1016/j.chieco.2016.08.005 |
| Popis: | This paper establishes a nonlinear theoretical model and uses panel smoothing transitional regression to study the optimal levels of government investment and public debt in a growth model using a panel dataset of 65 developed and developing economies over the period 1991–2014. The empirical results show that the effect of government investment on economic growth is decreasing as the level of expenditure rises. When the government investment/GDP ratio reaches a certain point (threshold), the effect of government investment could change from positive to negative. The effect of public debt on economic growth demonstrates a similar pattern. Our results suggest that there must exist an optimal level of government investment or public debt as far as economic growth is concerned, although the optimal level may vary in different economies. The government investment/GDP and public debt/GDP ratios of China were respectively 15.66% and 41.14% in 2014. These levels did not reach their respective thresholds and hence their effects on economic growth were still in the positive territory. Despite the expansion of government investment and public debt in China after the world financial crisis, their scales had not affected the country's economic growth during the data period. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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