scholarly journals Evaluation of the Non-Linear Effects of the Public Debt on the Economic Growth of the WAEMU

2020 ◽  
Vol 5 (2) ◽  
pp. p63
Author(s):  
Moussa SIGUE ◽  
Moussa COULIBALY
Keyword(s):  
Economic Growth ◽  
Quadratic Form ◽  
Public Debt ◽  
Institutional Quality ◽  
Economic Conditions ◽  
Macroeconomic Policies ◽  
The Public ◽  
Non Linear ◽  
Linear Effects ◽  
The Relationship

The aim of this article is to analyse the nature of the relationship between public debt and economic growth in the WAEMU. A standard growth model was specified and then estimated in quadratic form from the GMM (GMM). The results show a non-linear relationship between public debt and economic growth. Thus, public debt stimulates economic growth when it does not exceed the threshold of 15% of GDP. Robustness tests show that public debt is boosting the economic conditions of countries with sound macroeconomic policies and good institutional quality.

Is There a Threshold Effect of Public Debt on Economic Growth?

2019 ◽  
pp. 49-64
Author(s):  
Seher Gulsah Topuz ◽  
Taner Sekmen
Keyword(s):  
Economic Growth ◽  
Linear Relationship ◽  
Public Debt ◽  
Threshold Effect ◽  
Oecd Countries ◽  
Fiscal Policies ◽  
The Public ◽  
Regression Methods ◽  
The Relationship ◽  
Panel Threshold Regression

In this chapter, the relationship between public debt and economic growth is examined for OECD countries. In order to determine this relationship, the data between 2002 and 2016 is analyzed using panel threshold regression methods. The findings of the study suggest that the relationship between public debt and economic growth is linear. The public debt threshold is estimated at 99.75% for OECD countries but it is statistically insignificant. While the public debt to GDP ratio is both below and above this threshold, the effect of public debt on economic growth is negative and statistically significant. There is no evidence of the existence of a non-linear relationship between public debt and economic growth. These findings are expected to guide policymakers in the implementation of fiscal policies.

scholarly journals Relationship between Public Debt Burden and Health Expenditure in Sub-Saharan African Countries: The Role of Institutional Quality

2020 ◽  
Vol 6 (2) ◽  
Author(s):  
Rusmawati Said ◽  
Abdullahi Sani Morai
Keyword(s):  
Public Debt ◽  
Health Expenditure ◽  
Institutional Quality ◽  
Sub Saharan Africa ◽  
African Countries ◽  
The Public ◽  
Debt Burden ◽  
Sub Saharan ◽  
The Relationship

The historically lower level of public health expenditure of sub-Saharan African (SSA) countries could be partly explained by the mounting debt burden of this region. This consumes a sizable proportion of their domestic resources to debt servicing and potentially decreases their overall budgetary allocations to various sectors in the economy and health expenditure in particular. Using the Generalized Method of Moments (GMM) approach on a sample of 43 sub-Saharan African countries, we examined the relationship between the public debt burden and health expenditure highlighting the role of institutional quality for the period 2000 – 2014. The empirical result confirms that the relationship between public debt burden and health expenditure in sub-Saharan Africa is negative. Interestingly, however, the marginal effect of the relationship between the public debt burden and health expenditure has shown that such a negative relationship turns out to be positive when the quality of the institutions is at maximum. This suggests that the relationship between the public debt burden and health expenditure in sub-Saharan Africa is a function of institutional quality.  Therefore, to minimize the negative impact of public debt on health expenditure in sub-Saharan Africa, governments should take determine stand to minimize its debt accumulation and intensify efforts toward the improvement of institutional quality in the region comprehensively.

scholarly journals The Relationship between Public Debt and Economic Growth in Albania and Other Countries

2018 ◽  
Vol 7 (3) ◽  
pp. 95-102
Author(s):  
Eneida Përmeti Çifligu
Keyword(s):  
Economic Growth ◽  
International Monetary Fund ◽  
Public Debt ◽  
The Public ◽  
The World ◽  
Ministry Of Finance ◽  
The Relationship ◽  
The International Monetary Fund

Abstract The purpose of this study is the relationship between public debt and economic growth in Albania in post-dictatorships. Many authors have analyzed the mutual link between economic growth and public debt and the results and the methodologies are different in different countries and periods. Let’s see what data are specifically about these two indicators (provided by the Ministry of Finance, the Bank of Albania and the International Monetary Fund). Does the public debt performance affects the trend of the economic growth or not? I have mentioned what are the main events and phenomena in Albania, in Europe and in the World that have affected the Albanian economy. For these years, I have made comparisons with situations in other countries.

scholarly journals Debt-Growth Nexus in the MENA Region: Evidence from a Panel Threshold Analysis

Economies ◽  
2020 ◽  
Vol 8 (4) ◽  
pp. 102
Author(s):  
Mohammed Daher Alshammary ◽  
Zulkefly Abdul Karim ◽  
Norlin Khalid ◽  
Riayati Ahmad
Keyword(s):  
Economic Growth ◽  
North Africa ◽  
Public Debt ◽  
Threshold Value ◽  
Threshold Effect ◽  
Threshold Estimation ◽  
Mena Region ◽  
Mena Countries ◽  
The Public ◽  
The Relationship

This study examines whether a debt-to-GDP threshold exists in the public debt and economic growth relationship for 20 Middle East and North Africa (MENA) countries from 1990 to 2016 using the threshold estimation technique. The empirical results reveal that there is a threshold effect in the public debt and economic growth relationship. The MENA region’s debt-to-GDP threshold value as a developing region is lower than the debt threshold computed by earlier studies for developing countries. We found that the effect of public debt on economic growth is significant and positive only below the threshold value of debt-to-GDP. More precisely, debt has a promoting influence on economic growth when the debt is less than 58% of the GDP. This finding indicates that the relationship between public debt and economic growth is contingent on the debt-to-GDP ratio. Importantly, policymakers need to be more prudent when establishing a policy regarding debt issues.

scholarly journals Public Debt and Economic Growth in The SouthEast Asian Countries

2017 ◽  
Vol 6 (1) ◽  
pp. 177-188
Author(s):  
Muhammad Ghafur Wibowo
Keyword(s):  
Economic Growth ◽  
Southeast Asia ◽  
Public Debt ◽  
Government Debt ◽  
Asian Countries ◽  
Macroeconomic Policies ◽  
Role Of Government ◽  
The Relationship ◽  
Southeast Asian Countries

This study examines the relationship between public debt and economic growth in eight countries in Southeast Asia that are members of ASEAN. Through the study will contribute reference for each country to establish their macroeconomic policies. Using 10 years of data from 2006 to 2015 and analysis tools Autoregression Vector (VAR), the study attempts to test the theory of finance led growth. The main finding of this study is that public debt is actually able to increase the economic growth of a country significantly, although it takes a few years of its existence. This finding supports several previous studies that demonstrate the important role of government debt to the economy of a country.DOI: 10.15408/sjie.v6i1.4779

scholarly journals Public Debt and Economic Growth Nexus: Evidence from South Asia

2018 ◽  
Author(s):  
Saira Saeed ◽  
Tanweer Islam
Keyword(s):  
Economic Growth ◽  
Sri Lanka ◽  
South Asia ◽  
Public Debt ◽  
Developing Economies ◽  
Threshold Effect ◽  
The Public ◽  
Threshold Levels ◽  
Literature Evidence ◽  
The Relationship

It is well established in literature that the public debt and economic growth bear positive and non-linear relationship. However, in recent literature, evidence of no causal relationship is found when accounted for endogeneity in case of advanced economies (Panizza & Presbitero, 2014). Chudik, Mohaddes, Pesaran, & Raissi, (2017) analyse the data on forty countries and find no evidence of universally applicable threshold effect in the relationship between debt and growth. These advancements in the debt-growth literature provides the motivation to re-explore the relationship between public debt and economic growth under non-linearity and endogeneity in context of developing economies of South Asia including Pakistan, India, Bangladesh and Sri-Lanka for the period 1980-2014. There exists a significant, positive but nonlinear relationship between the public debt and economic growth for the selected set of developing countries when accounted for endogeneity and non-linearity. The negative association between the public debt and economic growth for SAARC region is found when the debt level is higher than 61% of GDP which is quite lower than developed economies (90% of GDP). Individual threshold levels for debt-to-GDP ratio divulge that Sri Lanka, Pakistan and India need to control their public borrowings as their current debt levels are higher and/or around the respective threshold levels.

scholarly journals Public Debt and Economic Growth in Egypt

2018 ◽  
Vol 8 (3) ◽  
pp. 183
Author(s):  
Amal Soliman ElGhouty
Keyword(s):  
Economic Growth ◽  
Growth Performance ◽  
Public Debt ◽  
Main Concern ◽  
The Public ◽  
Debt Problem ◽  
High Level ◽  
The Relationship ◽  
Revolutionary Period

The public debt has been representing a serious problem in Egypt during recent years. The main concern of the paper is to classify the extent of the debt problem in Egypt focusing on the post -revolutionary period since 2011. In the paper, reasons for the high level of public debt will be identified. Also, the economic growth performance will be analyzed simultaneously, then the relationship between both public debt and economic growth will be determined. Some guidelines for policymakers will be presented in the last section.  

scholarly journals The Impact of Public Debt on Economic Growth in Ukraine

2019 ◽  
Vol 53 (4) ◽  
pp. 91
Author(s):  
Iryna Kondrat ◽  
Olena Pozniakova ◽  
Oksana Chervinska
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Public Debt ◽  
The State ◽  
Gdp Per Capita ◽  
Gdp Growth ◽  
The Public ◽  
Per Capita ◽  
The Impact ◽  
The Relationship

<p><strong>Theoretical background:</strong> The growth in government borrowing, carried out in connection with the banks’ capitalisation, significantly increased the state budget expenditures aimed at servicing the capitalisation domestic public debt, which reinforces the general tendency regarding the exacerbation of the budget risk in the debt sphere in Ukraine. A weighty debt-creating factor was the budget deficit, which was covered by borrowing. Proceeding ahead of the rate of increase in debt volumes in comparison with gross domestic product (GDP) growth rates under the influence of internal and external destabilising factors contributed to the excess of the debt levels security indicators and increased the insolvency risk of the state. The increase of the obligations share denominated in foreign currency or linked to the exchange rate in the overall debt structure as an important indicator of the financial system’s vulnerability to exchange rate fluctuations creates additional threats to debt sustainability regarding the increasing currency risk and the national currency devaluation.</p><p><strong>Purpose of the article:</strong> The article is focused on studying the dynamics and structure of Ukraine’s public debt, its ratio to GDP, and an empirical analysis of the relationship between public debt (external and domestic) and economic growth in Ukraine.</p><p><strong>Research methods:</strong> To empirically test the relationship between public debt and economic growth in Ukraine over the 1992 to 2018 period, multiple regression models were conducted. A real GDP per capita was used as an indicator for economic growth and the debt-to-GDP ratio was used as an index of public debt. Research hypotheses were the following: H1: The public external debt-to-GDP ratio and GDP per capita have a strong negative and statistically relevant correlation; H2: The public domestic debt-to-GDP ratio and GDP per capita have a strong negative and statistically relevant correlation.</p><p><strong>Main findings:</strong> Examining the dynamics and structure of Ukraine’s public debt by borrowing market (external and domestic), it is concluded that there is no strong negative or positive statistically relevant correlation between the public debt-to-GDP ratio and GDP per capita for Ukraine. The impact of this factor is so insignificant that it encourages further research to verify that low GDP growth rate causes the increase in Ukraine’s public debt.</p>

scholarly journals Public Debt Threshold in the Republic of North Macedonia

2021 ◽  
Author(s):  
Sasho Kjosev ◽  
Martin Noveski ◽  
Nina Mojsova Kjoseva
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Turning Point ◽  
Generalized Method Of Moments ◽  
Annual Data ◽  
Reverse Causality ◽  
The Public ◽  
General Government ◽  
Non Linear ◽  
The Republic

Research question: Is there a non-linear relationship between public debt and economic growth in North Macedonia, in the form of an inverted U-shape? Motivation: Government consumption plays an important role in the stability of the national economy, especially in periods of economic crisis. However, a rapidly growing public debt is a concerning issue nowadays, since it might jeopardize economic growth perspectives. Economic theory suggests that public debt has non-linear impact on economic growth in the form of an inverted U-shape. In other words, it is believed that after a certain threshold, the public debt will have deleterious impact on economic growth. Idea: Given that such threshold varies significantly across countries, the aim of this paper is to calculate the turning point of the public debt impact in the Republic of North Macedonia. Tools: For this purpose, we use non-linear multiple regression model for the real GDP growth rate as a dependent variable, general government public debt-to-GDP ratio (in nominal and squared terms) as a key independent variable, as well as several other controlling variables. Since theory also suggests reverse causality between economic growth and public debt, we use two different estimation techniques (Ordinary Least Squares and Generalized Method of Moments) to deal with potential endogeneity, and to cross-validate the results. Data: In this regard, we use annual data for the period 1998 – 2019, for 14 variables in total, obtained from several different data sources. Findings: Our results show that general government debt in the Republic of North Macedonia positively affects economic growth until it reaches around 30% of GDP, whereas further indebtedness after that turning point will most likely have a negative impact. Contribution: Given that current debt level is far above the estimated turning point, the need of urgent fiscal consolidation inevitably arises. This is especially important in the light of the ongoing COVID-19 crisis, which imposed the need for strong government intervention and pointed out the importance of the fiscal space for such matter.

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