regressions model originally proposed by Gonzalez, Ter ´ asvirta, and van Dijk ¨ (2005). Using this
approach, that allows for a gradual change in the regression coefficient when moving from one
regime to the other, Minea and Parent (2012) find that public debt is negatively associated with
growth when the debt-to-GDP ratio is above 90 percent and below 115 percent. However, they
also find that the correlation between debt and growth becomes positive when debt surpasses
115 percent of GDP. While Minea and Parent’s (2012) results should not be interpreted as an argument
for fiscal profligacy, they suggest the existence of complex non-linearities, which may
not be captured by models that use a set of exogenous thresholds.