Public Debt and Economic Growth in the European Union: Lessons for Post-pandemic Period
Public Debt and Economic Growth in the European Union: Lessons for Post-pandemic Period
Author(s): Mihaela SimionescuSubject(s): National Economy, Political history, Recent History (1900 till today), Economic policy, EU-Approach / EU-Accession / EU-Development, Public Finances
Published by: Vysoká škola ekonomická v Praze
Keywords: Debt; government effectiveness; economic growth; panel data models; COVID-19 pandemic;
Summary/Abstract: Europe’s public debt situation is likely to persist in the coming years. This study evaluates the impact of public debt on growth in the EU-27 countries. The analysis, using dynamic panel threshold models, reveals an indirect connection between debt and growth from 1995 to 2023. The research identifies an indirect effect of general and central debt on economic growth during the COVID-19 pandemic. While government effectiveness positively influences growth in the long run, this effect is not observed during the pandemic. To ensure the robustness of our findings, dynamic panel data models and mean group (MG) estimators are employed. The empirical results support the need for policies to reduce public debt and promote sustainable growth in the EU.
Journal: Politická ekonomie
- Issue Year: 73/2025
- Issue No: 6
- Page Range: 967-985
- Page Count: 19
- Language: English
