The Impact of Public Debt on the Economic Growth in South Eastern Europe: An Empirical Panel Investigation
The Impact of Public Debt on the Economic Growth in South Eastern Europe: An Empirical Panel Investigation
Author(s): Burim GashiSubject(s): Economy, National Economy, Public Finances
Published by: Институт за икономически изследвания при Българска академия на науките
Keywords: public debt; economic growth; thresholds; dynamic panel methods; South Eastern European countries
Summary/Abstract: The goal of this paper is to examine the impact of public debt in six countries from South-Eastern Europe over the period 2008 to 2017, by applying three different panel methods: the fixed effects model, the GMM method and the system-GMM method. More specifically, we investigate if there is evidence of a non-linear (quadratic) relationship in this group of countries. The results of our study confirm that increasing public debt has a statistically significant negative influence on the GDP growth. Also, the results confirm the existence of a „U inverted” relationship, with a maximum debt threshold of about 58% of GDP. After this threshold, public debt is expected to negatively affect the economic growth rate, due to fear of public debt unsustainability higher interest rates, and severe budgetary consolidation measures.
Journal: Икономически изследвания
- Issue Year: 2020
- Issue No: 2
- Page Range: 3-18
- Page Count: 16
- Language: English