The Impact of Public Debt on Economic Growth: Evidence for Balkan Countries
The Impact of Public Debt on Economic Growth: Evidence for Balkan Countries
Author(s): Burim GashiSubject(s): National Economy, Regional Geography, Economic development, Transformation Period (1990 - 2010), Present Times (2010 - today), Public Finances
Published by: Instytut Nauk Ekonomicznych Polskiej Akademii Nauk
Keywords: public debt; economic growth; Western Balkans;
Summary/Abstract: The aim of this paper is to analyse the impact of public debt on economic growth in five Western Balkan countries using data for the period of 2008–2017. The author investigates whether there is a non-linear (quadratic) relationship between the public debt (measured by its proportion to GDP) and economic growth (measured by the growth rate of GDP per capita) in this group of countries. Empirical results suggest a negative relationship between public debt and economic growth, controlling for other determinants (trade openness, total investment, current account balance, and primary budget balance). The results confirmed the existence of a non-linear, ‘U-inverted’ relationship between public debt and economic growth, with maximum debt threshold at approximately 63–76% of GDP.
Journal: Ekonomista
- Issue Year: 2019
- Issue No: 6
- Page Range: 769-780
- Page Count: 12
- Language: English
