Please use this identifier to cite or link to this item:
http://hdl.handle.net/1942/34333
Full metadata record
DC Field | Value | Language |
---|---|---|
dc.contributor.author | VANLAER, Willem | - |
dc.contributor.author | Picarelli, M | - |
dc.contributor.author | MARNEFFE, Wim | - |
dc.date.accessioned | 2021-06-23T11:47:58Z | - |
dc.date.available | 2021-06-23T11:47:58Z | - |
dc.date.issued | 2021 | - |
dc.date.submitted | 2021-06-17T13:44:38Z | - |
dc.identifier.citation | OPEN ECONOMIES REVIEW, 32 (4) , p. 789-820 | - |
dc.identifier.issn | 0923-7992 | - |
dc.identifier.uri | http://hdl.handle.net/1942/34333 | - |
dc.description.abstract | This paper exploits a panel of 28 European Union (EU) countries between 1995 and 2016 to analyze whether higher debt resulted in lower private investment - the so called debt overhang effect. We deal with the potential endogeneity between private investment and other macroeconomic determinants by applying an instrumental variable approach (GMM). Our results support the debt overhang hypothesis and indicate that this relationship only works through the public debt channel. In our baseline regression, a 10 percentage point increase in public debt reduced private investment by euro18.32 billion, given the levels of private investment prevalent in 2016. By contrast, private debt does not appear to be a significant determinant of private investment. These results hold after controlling for a number of factors that might have caused public debt to increase and private investment to decrease. While our analysis focuses on the financial sector channel, we find no evidence that public debt tightens the credit constraints for private firms or worsens the public debt overhang. We also show that government bailouts of the financial sector, which could alleviate financial distress and boost credit provision, do not appear to be effective in mitigating the public debt overhang effect. Finally, we find evidence that the financial openness of a country does alleviate the negative impact of public debt on private investment. This might suggest that attracting foreign capital compensates for a contraction in the domestic pool of financial resources due to higher public debt levels. | - |
dc.description.sponsorship | We thank Samanta Bielen, Nicola Borri, Angela Capolongo, Alessandra Donini, Guido Traficante, Lorenzo Ricci, and two anonymous reviewers for their constructive comments on an earlier draft of this manuscript. Sylvia Baudet von Gersdorff provided excellent editorial support. The views expressed in this paper are solely the responsibility of the authors and should not be interpreted as representing the views of the European Stability Mechanism. | - |
dc.language.iso | en | - |
dc.publisher | SPRINGER | - |
dc.rights | The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2021, corrected publication 2021 | - |
dc.subject.other | Debt overhang | - |
dc.subject.other | Private investment | - |
dc.subject.other | Dynamic panel data | - |
dc.title | Debt and Private Investment: Does the EU Suffer from a Debt Overhang? | - |
dc.type | Journal Contribution | - |
dc.identifier.epage | 820 | - |
dc.identifier.issue | 4 | - |
dc.identifier.spage | 789 | - |
dc.identifier.volume | 32 | - |
local.bibliographicCitation.jcat | A1 | - |
local.publisher.place | VAN GODEWIJCKSTRAAT 30, 3311 GZ DORDRECHT, NETHERLANDS | - |
local.type.refereed | Refereed | - |
local.type.specified | Article | - |
dc.identifier.doi | 10.1007/s11079-021-09621-x | - |
dc.identifier.isi | 000650068600001 | - |
dc.identifier.eissn | 1573-708X | - |
local.provider.type | Web of Science | - |
local.uhasselt.uhpub | yes | - |
local.uhasselt.international | yes | - |
item.fulltext | With Fulltext | - |
item.contributor | VANLAER, Willem | - |
item.contributor | Picarelli, M | - |
item.contributor | MARNEFFE, Wim | - |
item.accessRights | Open Access | - |
item.validation | ecoom 2022 | - |
item.fullcitation | VANLAER, Willem; Picarelli, M & MARNEFFE, Wim (2021) Debt and Private Investment: Does the EU Suffer from a Debt Overhang?. In: OPEN ECONOMIES REVIEW, 32 (4) , p. 789-820. | - |
crisitem.journal.issn | 0923-7992 | - |
crisitem.journal.eissn | 1573-708X | - |
Appears in Collections: | Research publications |
Files in This Item:
File | Description | Size | Format | |
---|---|---|---|---|
Debt and private investment (final).pdf | Peer-reviewed author version | 735.23 kB | Adobe PDF | View/Open |
s11079-021-09621-x.pdf Restricted Access | Published version | 614.78 kB | Adobe PDF | View/Open Request a copy |
WEB OF SCIENCETM
Citations
9
checked on Apr 24, 2024
Page view(s)
48
checked on Sep 5, 2022
Download(s)
58
checked on Sep 5, 2022
Google ScholarTM
Check
Altmetric
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.