A. Stavytskyy, ORCID iD 0000-0002-5645-6758, PhD in Economics, Associate Professor, M. Bilychenko, ORCID iD 0000-0003-4657-1039, economist Taras Shevchenko National University of Kyiv, Kyiv, Ukraine MODELING THE IMPACT OF PUBLIC DEBT ON THE ECONOMIC GROWTH WORLDWIDE

The article deals with the analysis how the state debt influences economic growth of different countries of the world. The existing method of assessing the impact of public debt on the economic growth of developed countries has been improved, using the characteristic of debt stability and the application of Hansen econometric model in the pre- and post-crisis period. Using this model, we have investigated the existence of threshold values for various debt variables in developed and low-income countries. The analysis showed that the level of stable debt to GDP of 65­-70% provides the highest economic growth throughout the investigated period. The threshold of the external debt to export ratio was found to be 191% for low-income countries, above which there is a slowdown in economic growth. Also, the article analysed the existence of threshold values for HIPC and non-HIPC countries separately. Applications of the regression analysis helped to reveal the state debt impact on the economic growth for the Ukrainian economy. The effect of debt on economic growth begins to fall after reaching the ratio of external debt to GDP level of 88%.

Key words: public debt; economic growth; Hansen panel threshold regression; developed countries; low income countries; Ukraine.

Received: 28/01/2018

1st Revision: 10/02/2018

Accepted: 20/03/2018

DOI: https://doi.org/10.17721/1728-2667.2018/197-2/8


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