This paper establishes a nonlinear theoretical model and uses panel smoothing transitional
regression to study the optimal levels of government investment and public debt in a growth
model using a panel dataset of 65 developed and developing economies over the period
1991–2014. The empirical results show that the effect of government investment on
economic growth is decreasing as the level of expenditure rises. When the government
investment/GDP ratio reaches a certain point (threshold), the effect of government …