Reassessing the public debt threshold in the EU: Do macroeconomic conditions matter?

This paper explores the relationship between debt and growth in 28 EU member states over 1995-2014 period using an interacted panel data estimator standard augmented Solow regression. The nonlinear nature of debt-growth allows for computation optimal turning point given set four conditioning variables. Additionally, heterogeneity members? rates is explored by a quantile regression with nonadditive fixed effects. results suggest that while additional government consumption decreases level growth-maximizing debt, private has positive impact on point. On average, estimated thresholds are located vicinity policy-set 60% debt-to-GDP ratio; however, observed high underlying wide confidence intervals.