Exploring the linkage between debt and growth: a wavelet analysis
In this paper, we investigate the relationship between public debt (ratio to GDP) and real per capita GDP growth for the US and seven Eurozone countries. By using the Wavelet Coherence tools associated with Continuous Wavelet Transform, we analyze the lead-lag relationship between the series over short term and long term frequency bands. Overall, we do not find evidence of a negative effect of debt on growth.
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