European Parliament Library

Debt Overhang or Debt Irrelevance? Revisiting the Debt-Growth Link, Tito Cordella, Luca Ricci, Marta Ruiz-Arranz

Abstract
Do Highly Indebted Poor Countries (HIPCs) suffer from a debt overhang? Is debt relief going to improve their growth rates? To answer these important questions, we look at how the debt-growth relationship varies with indebtedness levels and other country characteristics in a panel of developing countries. Our findings suggest that there is a negative marginal relationship between debt and growth at intermediate levels of debt, but not at very low debt levels, below the “debt overhang” threshold, or at very high levels, above the “debt irrelevance” threshold. Countries with good policies and institutions face overhang when debt rises above 15-30 percent of GDP, but the marginal effect of debt on growth becomes irrelevant above 70-80 percent. In countries with bad policies and institutions, overhang and irrelevance thresholds seem to be lower, but we cannot rule out the possibility that debt does not matter at all
Table Of Contents
""Contents""; ""I. INTRODUCTION""; ""II. LITERATURE REVIEW""; ""III. DATA""; ""IV. METHODOLOGY AND RESULTS""; ""V. CONCLUSIONS AND POLICY IMPLICATIONS""; ""REFERENCES""
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (55 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781283517768

Library Locations

  • EP Library Luxembourg

    Rue du Fort Thüngen, Luxembourg, L-1313, LU
    Borrow
  • EP Library Strasbourg

    7 Place Adrien Zeller, Allée du Printemps, Strasbourg, F-67070, FR
    Borrow
  • EP Library Brussels

    60 rue Wiertz, Brussels, B-1047, BE
    Borrow