We analyze the debt-growth relationship in the neoclassical growth framework. There is always an issue of heterogeneity in cross-country panel analysis; therefore, convergence issue arises. Economies with higher values of real income tend to grow faster than the economies with a higher starting value of real per capita income (Barro and Sala-i-Martin, 2004). However, we use government debt-to-GDP ratio. Rather than the initial per capita income, other aspects also can explain the convergence phenomena.
Our study
is designed to estimate the linearities and nonlinearities in the debt-growth
relationship in the context
of BRI
countries. In this paper, we examine the impact of various indicators of debt
burden on the economic growth
of BRI countries and corruption indices as the transmission channels.
Our models take the following forms;
Where grow is the GDP growth, Xitj is a set of control variables,
DEBT is public debt, and DS is debt servicing. Subscripts i and t represent panel
and time dimension, while η and denote
time-specific and country-specific effects.
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