Transitional Behavior of Government Debt Ratio on Growth: The Case of OECD Countries
Bibliographic record
Abstract
We revisit how the government debt ratio and real GDP growth relationship varies with indebted levels and two macroeconomic control variables, unemployment rate and inflation rate, in a balanced panel of 19 OECD countries over the period 1993-2007, after the signing of the EU Treaty in Maastricht on February 7, 1992. The empirical results indicate that there is one threshold value of 97.82%, which divides our sample into two regimes. The mean of the real GDP growth rates in the left regime is 1.16% higher than that in the right regime. The significantly positive marginal effects of government debt ratio on real GDP growth in both left and right regimes are consistent with the stimulus view (Eisner, 1992). Neither “debt overhang” nor “debt irrelevance” exists in these OECD countries. Our findings also show that there is a significantly negative marginal effect of unemployment rate on real GDP growth in the left regime, but significantly positive in the right regime. This positive nexus between the unemployment rate and real GDP growth in the right regime is inconsistent with Okun’s Law. Meanwhile, there is a significantly negative impact of inflation rate on real GDP growth in the left regime, but non-significantly negative in the right regime. The transitional behavior from the right to the left regime in Belgium in 2006 and in Canada in 1998 is good example for the highly indebted countries, such as Italy and Japan. Therefore, our empirical findings have important implications for fiscal policymakers, not only in these OECD countries but also in the rest of world.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.001 | 0.000 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.001 | 0.000 |
| Bibliometrics | 0.000 | 0.000 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.000 | 0.000 |
| Open science | 0.000 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".