Analyzing the Threshold Relationship between Public Debt and Economic Growth in New EU Member States from Central and South Eastern Europe
Analyzing the Threshold Relationship between Public Debt and Economic Growth in New EU Member States from Central and South Eastern Europe
Author(s): Mihail Petkovski, Aleksandar Stojkov, Jordan KjosevskiSubject(s): National Economy, Supranational / Global Economy, Business Economy / Management, Economic history, Public Finances, Socio-Economic Research
Published by: SAV - Slovenská akadémia vied - Ekonomický ústav SAV a Prognostický ústav SAV
Keywords: public debt; economic growth; EU; debt threshold;
Summary/Abstract: This paper examines the relationship between public debt and economic growth in 11 new EU member states (NMS) from Central and South Eastern Europe during 2000–2021. The authors explore the potential non-linear (quadratic) nature of this relationship, accounting for heterogeneity by dividing the NMS into three subgroups: South Eastern European, Baltic, and Visegrad countries. Findings suggest a U-inverted relationship, where public debt positively affects growth up to a threshold, beyond which a negative effect prevails. The estimated debt-to-GDP tipping point ranges from 58.5% to 73.5%, depending on the subgroup. The results offer insights for designing a new EU fiscal rules framework.
Journal: Ekonomický časopis
- Issue Year: 72/2024
- Issue No: 07-08
- Page Range: 360-389
- Page Count: 30
- Language: English
