INVESTMENT, DEBT AND ECONOMIC GROWTH - AN ARDL PANEL COINTEGRATION ANALYSIS
INVESTMENT, DEBT AND ECONOMIC GROWTH - AN ARDL PANEL COINTEGRATION ANALYSIS

Author(s): Bogdan Firtescu, Mihaela Onofrei, Claudia Boghicevici, Gina-Simona Firtescu
Subject(s): Economy
Published by: Editura Universităţii »Alexandru Ioan Cuza« din Iaşi
Keywords: ARDL; public debt; capital formation; OECD Countries;
Summary/Abstract: The paper empirically investigates the short and long-run relationship between investments and capital formation, public debt and economic growth in the EU and OECD countries, using data in a timespan from 1995 to 2018. For investments, the authors have used as proxy the gross fixed capital formation, which measures as the acquisition of produced assets, while for the economic growth we have used as proxy Gross Domestic Product per capita. In this study, we implied several econometric methods related to ARDL (auto regressive distributed lag models) such as pooled mean group (PMG), mean group (MG) and dynamic fixed effects (DFE). The usual stationarity tests and cointegration tests have been performed, to support the usage of the proposed methodology. The empirical results sustain the necessity of using the public policy for increasing the investments (capital formation), as a premise for economic growth and the use with caution of the public debt.

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