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Yu Hsing
''Does the Reinhart-Rogoff Hypothesis Apply to China?''
( 2020, Vol. 40 No.4 )
This paper finds that the threshold of the government debt ratio for China is 33.638%. A higher debt ratio would raise the growth rate if the debt ratio is up to 33.638% whereas a higher the debt ratio would reduce the growth rate if the debt ratio is greater than 33.638%. In addition, a higher ratio of employment change to GDP or a higher investment-to-GDP ratio raises the growth rate. Therefore, the debt threshold of 90% proposed by Reinhart and Rogoff does not apply to China.
Keywords: fiscal policy, government debt, economic growth, Reinhart-Rogoff hypothesis
JEL: E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
H6 - National Budget, Deficit, and Debt: General
Manuscript Received : Jul 01 2020 Manuscript Accepted : Oct 12 2020

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