Abstract

The objective of this paper is to shed light on Cote d’Ivoire’s indebtedness and see to what extent, the country’s current level of debt is worrisome. This research is parametric using a time series data spanning from 1970 to 2015 to investigate the debt and growth nexus. After investigating the time series characteristics of the data, it was found that the variables were I(1) and co-integrated. Findings show evidence of a nonlinear relationship between debt and growth and more importantly found a threshold point of 42.9% beyond which debt accumulation will negatively affect economic growth. Thus, given the current level of the country’s debt level which stood at 48.3%, one should be worried and call on the attention of the authorities for more prudential economic governance.

Key words: Debt to Gross domestic product (GDP) ratio, economic growth, nonlinearity, threshold, Cote d’ivoire, indebtedness.