Government Debt Thresholds Unveiled: Exceeding 90% GDP Slows Economic Growth
Government debt levels have been a concern after financial crises. The study looked at how debt affects economic growth. They found that countries with debt below 90% of GDP have a weak relationship with growth. Different countries have different debt thresholds, ranging from 84 to 114% of GDP. Going over the threshold by 10% can reduce annual GDP growth by 10 to 30 basis points. The threshold varies based on factors like political systems and geography.