TY - JOUR AU - Ostrihoň, Filip AU - Širaňová, Mária AU - Workie Tiruneh, Menbere PY - 2023/01/31 Y2 - 2024/03/29 TI - Reassessing the Public Debt Threshold in the EU: Do Macroeconomic Conditions Matter? JF - Panoeconomicus JA - Panoeconomicus VL - 70 IS - 1 SE - Original scientific paper DO - 10.2298/PAN181114007O UR - http://www.panoeconomicus.org/index.php/jorunal/article/view/688 SP - 47-69 AB - <p>This paper explores the relationship between debt and growth in the 28 EU member states over the 1995-2014 period using an interacted panel data estimator in standard augmented Solow growth regression. The nonlinear nature of the debt-growth relationship allows for computation of the optimal turning point given the set of four conditioning variables. Additionally, the heterogeneity in EU members’ growth rates is explored by a panel data quantile regression estimator with nonadditive fixed effects. The results suggest that while additional government consumption decreases the level of growth-maximizing debt, the level of private debt has a positive impact on the optimal turning point. On average, estimated optimal debt thresholds are located in the vicinity of the policy-set 60% debt-to-GDP ratio; however, the observed high heterogeneity in the underlying data results in wide confidence intervals. <br /><br /><strong>JEL</strong>: F34, F43, H63.</p> ER -