Chen, C.; Stengos, T.; Zhang, J. Public Debt and Economic Growth: A Panel Kink Regression Latent Group Structures Approach. Econometrics2024, 12, 7.
Chen, C.; Stengos, T.; Zhang, J. Public Debt and Economic Growth: A Panel Kink Regression Latent Group Structures Approach. Econometrics 2024, 12, 7.
Chen, C.; Stengos, T.; Zhang, J. Public Debt and Economic Growth: A Panel Kink Regression Latent Group Structures Approach. Econometrics2024, 12, 7.
Chen, C.; Stengos, T.; Zhang, J. Public Debt and Economic Growth: A Panel Kink Regression Latent Group Structures Approach. Econometrics 2024, 12, 7.
Abstract
This paper investigates the relationship between public debt and economic growth in the context of a panel kink regression with latent group structures. The proposed model allows us to explore the heterogeneous threshold effects of public debt on economic growth based on unknown group patterns. We propose a least squares estimator and demonstrate the consistency of estimating group structures. The finite
sample performance of the proposed estimator is evaluated by simulations. Our findings reveal that the nonlinear relationship between public debt and economic growth is characterized by a heterogeneous threshold level, which varies among different groups, and highlight that the mixed results found in previous studies may stem from the assumption of a homogeneous threshold effect.
Keywords
Kink regression model; Latent group structures; Public debt; Debt threshold
Subject
Business, Economics and Management, Econometrics and Statistics
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
