Impact of Debt Threshold Level on GDP Per Capita Growth: Evidence of G7 Advance Countries
International Journal of Science, Technology and Society
Volume 7, Issue 5, September 2019, Pages: 74-77
Received: Apr. 18, 2019; Accepted: Jul. 27, 2019; Published: Nov. 25, 2019
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Irfan Alam, Department of Management Sciences, Ghulam Ishaq Khan Institute of Engineering Sciences and Technology, Topi, Pakistan
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The aim of this study is to investigate the relationship between debt threshold and GDP per capita growth by using Panel Threshold Regression. The sample of the study is G7 (Advanced Countries) from the period of 1995 to 2015. The results suggested that the scale of debt threshold is ambiguous in this study because debt threshold has not significant effect on GDP per capita growth at the threshold level of 62.47%. The magnitude of debt effect is not same on below and above threshold level. If debt is below and above from 62.47%, its significant positive effect on GDP growth at 0.70% and 0.47% respectively. Also, explanatory variables are used in the study include inflation, trade to GDP, gross saving to GNI, government final consumption expenditure and total investment to GDP. There is a mix result of explanatory variables in the study as inflation and trade to GDP have positive effect on GDP per capita growth but does not produce significant result while gross saving and total investment to GDP have significant positive effect on GDP growth. At last, government final consumption expenditure has significant negative effect on GDP growth.
GDP Per Capita Growth, Public Debt, Threshold Effect, Panel Threshold Regression, G7 (Advance Countries)
To cite this article
Irfan Alam, Impact of Debt Threshold Level on GDP Per Capita Growth: Evidence of G7 Advance Countries, International Journal of Science, Technology and Society. Vol. 7, No. 5, 2019, pp. 74-77. doi: 10.11648/j.ijsts.20190705.11
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