Our results for developing countries are in contrast to the results of Patillo
et al. (2002), who find evidence of a nonlinear relationship between total external
debt and growth. Moreover, they find that there is a positive relationship
between total external debt and economic growth when the external debt level
is bellow a certain threshold, and a negative relationship when it is above the
threshold, i.e. an inverted-U shape relationship. In contrast, we find that there
is only limited support for a nonlinear relationship, and no evidence of a positive
relationship between total external debt and growth at low debt levels, i.e. there
is no indication on the existence of an inverted-U shape relationship between
external debt and growth.