preprint · SPIRE - Sciences Po Institutional REpository
This paper aims to determine the optimal public debt threshold in DRC. To do this, we use the regime-switching models introduced by Chan and Tong (1986). We then apply this methodology to data for the DRC economy over the period 1993-2022, while controlling for other determinants of growth. The results show that, ceteris paribus, external public debt would reduce growth when the public debt ratio is above 19.65%. In terms of prospects, these results provide evidence for a careful debt policy capable of appropriately financing economic activity to sustain long-run growth.
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