Theoretical and Applied Economics (Dec 2020)
On the relationship between economic growth and government debt for Bulgaria. Test of the Reinhart-Rogoff hypothesis
Abstract
Based on an extended production function, this paper finds that the turning point of the government debt ratio for Bulgaria is estimated to be 45.2631%, suggesting that an increase in the debt ratio beyond 45.2631% will cause the growth rate of real GDP to decline. This turning point for Bulgaria is far less than the 90% turning point proposed by Reinhart and Rogoff. Therefore, the Reinhart-Rogoff hypothesis does not apply to Bulgaria.
