Investigating the Threshold Impact of Country Risk Index on the Impact of Public Debt on Economic Growth: Panel Smooth Transition Regression (PSTR) Approach

Subject Areas : Financial engineering

javad harati ¹ , Nesa Kamalian ² , elham bita ³

1 - Department of Economics, Faculty of Humanities, Bojnord University, Bojnord, Iran
2 - Department of Economics, Faculty of Economic and Administrative Sciences, Ferdowsi University , Mashhad, Iran
3 - Department of Economics, Faculty of Humanities, Bojnord University, Bojnord, Iran

Received: 2021-09-15 Accepted : 2021-12-05 Published : 2022-06-22

Keywords: Economic Growth, Political Risk, Financial Risk, Public Debt, Economical Risk, Composite Risk and Panel Smooth Transition Regression Models,

Abstract :

The impact of public debt on economic growth is recognized as one of the important issues in economic analysis. . Therefore, in the present study, using the annual data of 128 selected countries and the Panel Smooth Transition Regression (PSTR) model, an attempt has been made to investigate the threshold impact of the country risk index on the impact of public debt on economic growth in four separate models over time. 2018-1996 .the findings indicate that, there is a significant nonlinear relationship between public debt and economic growth. However, the estimated models with transmission variables of political risk and composite risk in both regimes indicate that the public debt have had a positive effect on economic growth. Moreover, in the models with the transmission variables of financial risk and economic risk, the impact of the general debt on economic growth was negative and positive respectively in the first and second regime.