The Debt-to-GDP Threshold Effect On Output: A Country-Specific Analysis

Abstract

The recent economics literature has focused on establishing a general debt-to-GDP threshold across countries where output growth becomes negatively affected. This paper, conversely, attempts to establish debt-to-GDP thresholds for individual countries, the purpose of which is to show that a country’s fiscal policy decisions should be based on data specific to that country, which should foster more informed and prudent policy making.