Estimation of the public debt threshold effects on economic growth in sub-Saharan African countries

Abstract

Using data for 22 sub-Saharan African (SSA) countries, this paper investigates the effects of public debt on economic growth in SSA countries covering the period 1990–2021. Relying upon the estimation of Panel Smooth Transition Regression and generalized method of moments method, our findings offer strong evidence that public debt nonlinearly impacts economic growth. More specifically, there exists a threshold beyond which public debt exerts a negative effect on growth. These results can be used to formulate economic recommendations that the public authorities could implement to improve public debt management and maintain stable economic growth.