scholarly journals The Heterogeneous Public Debt–Growth Relationship: The Role of the Expenditure Multiplier

2021 ◽  
Vol 13 (9) ◽  
pp. 4602
Author(s):  
Mindaugas Butkus ◽  
Diana Cibulskiene ◽  
Lina Garsviene ◽  
Janina Seputiene
Keyword(s):  
Empirical Evidence ◽  
Public Debt ◽  
Panel Data Analysis ◽  
Threshold Level ◽  
Sustainable Growth ◽  
Marginal Effect ◽  
Empirical Examination ◽  
Negative Effect ◽  
High Expenditure ◽  
The Impact

Currently countries are facing a new crisis caused by the COVID-19, which leads to the rise of government expenditures and additional borrowing. This situation highlights the importance of examine factors which determine the level of public debt that still sustains economic growth. A growing body of research supports the idea of a non-linear debt–growth relationship and estimates the threshold level above which debt becomes unsustainable and has a negative effect on output. The empirical evidence points out that there is no single sustainable debt threshold level that holds for all countries. This research complements scarce empirical evidence on the heterogeneous debt–growth relationship and provides some insights on the publicly available statistical indicators that might signal a relatively low/high expenditure multiplier and, at the same time, potentially unsustainable/sustainable growth stimulus through the use of borrowed funds. We test the hypothesis that the expenditure multiplier is shaping the impact of public debt on growth. Our empirical examination is based on panel data analysis in the groups of countries with expected relatively high and low expenditure multiplier. Research results show that a statistically significant negative marginal effect of debt on growth starts to manifest at a lower debt-to-GDP ratio when the expenditure multiplier is lower and vice-versa. The study shed some light on the sources of heterogeneity in a debt–growth relationship. We can conclude that countries with a high expenditure multiplier level can borrow more and sustain growth. In contrast, in countries with a lower expenditure multiplier, a relatively low debt level becomes unsustainable for growth.

scholarly journals Population Ageing, Financial Deepening and Economic Growth: Evidence from China

2018 ◽  
Vol 10 (12) ◽  
pp. 4627 ◽  
Author(s):  
Shangmei Zhao ◽  
Jiang He ◽  
Haijun Yang
Keyword(s):  
Economic Growth ◽  
Positive Impact ◽  
Threshold Level ◽  
Inhibitory Effect ◽  
Population Ageing ◽  
Marginal Effect ◽  
Financial Deepening ◽  
Dynamic Panel ◽  
Negative Effect ◽  
The Impact

Using a panel of 31 Chinese provinces from 2000 to 2016, we investigated the impact of population ageing and financial deepening on economic growth. Based on the dynamic panel system GMM estimators, the empirical results address that both population ageing and financial deepening have a significantly positive impact on economic growth, while the interactions between them have a significantly negative effect on economic growth. From the perspective of total marginal effect, we also find that population ageing does contribute to economic growth but only when financial deepening is less than a threshold level; however, on the whole, financial deepening has an inhibitory effect on economic growth which increases with population ageing.

scholarly journals IMPACT OF IMF LENDING ANNOUNCEMENTS ON THE PERFORMANCE OF STOCK MARKET: EMPIRICAL EVIDENCE FROM PAKISTAN

2021 ◽  
Vol 9 (3) ◽  
pp. 467-476
Author(s):  
Muhammad Azeem ◽  
Nisar Ahmad ◽  
Sarfraz Hussain ◽  
Muzammil Khurshid ◽  
Safyan Majid
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Empirical Evidence ◽  
Economic Performance ◽  
Economic Conditions ◽  
The Political ◽  
Time Varying ◽  
Negative Effect ◽  
Multiple Challenges ◽  
The Impact

Purpose of the study: Stock markets have demonstrated varying reactions to IMF lending announcements across various economies. Announcements offered by IMF often be perceived negatively by the participants of the stock market, because of stringent conditions accompanied with the loan that may oppose the political and economic agenda of a borrowing nation. Thus, this study intends to investigate the impact of IMF’s announcements about extending loans to Pakistan on the performance of the Stock market in the debt-ridden economy. Methodology: For regular returns from 1997 to 2017, the benchmarking indexes of KSE-100 and 30 were used. Meanwhile, IMF lending arrangements are categorized into three respective dummies (standby, extended credit facility, and extended fund facility). The Generalized Autoregressive Conditional Heteroscedastic (GARCH) model was used to investigate the effect of IMF’s lending news on the regular stock returns. Main findings: The results show a statistically significant effect of the IMF’s News about lending arrangements on the performance of the stock market in Pakistan. Surprisingly, the negative effect of IMF lending announcements on the performance of the stock market in Pakistan implies that the loans extended by IMF are not professed by speculators as good for the economic performance of the economy. Application of this study: The findings of this study imply that simply extending loans is not a panacea for politically unstable and financially ruined nations. Lending strategies of IMF need to be favourable for the political and economic conditions of a borrowing country. Originality/ Novelty: As for as the novelty is concerned, the study has highlighted the time-varying impact of IMF lending announcements on the performance of the stock market in a financially fragile country where a newborn government facing multiple challenges has made its best effort to avoid borrowing from IMF.

scholarly journals DOES PUBLIC DEBT HAMPER ECONOMIC GROWTH: EVIDENCE FROM EUROPEAN TRANSITIONAL COUNTRIES

2019 ◽  
Vol 34 (5) ◽  
pp. 1223-1228
Author(s):  
Liza Alili Sulejmani ◽  
Armend Ademi
Keyword(s):  
Economic Growth ◽  
Transition Economies ◽  
Public Debt ◽  
Fixed Effects ◽  
Global Financial Crisis ◽  
Fixed Capital Formation ◽  
Negative Effect ◽  
Per Capita ◽  
The Impact ◽  
Positive Effect

Lately, there has been an increased interest among policy makers and scholars regarding the nexus between public debt and economic growth, with emphasizes on its effects on transition economies, particularly after the last global financial crisis. This paper tries to investigate the impact of public debt on economic growth in the European transition economies, for the time spin 2000-2016, by using Pooled OLS, Fixed effects, Random effects and Hausman – Taylor Instrumental variable (IV). In addition, results reveal that public debt although has positive effect on per capita growth still is statistically insignificant, whereas debt square has negative effect on per capita GDP growth. Further, gross savings, final consumption and fixed capital formation have positive effect on per capita growth, while government expenditures do not show significant impact. Moreover, such results highlight important implications for fiscal policymakers in these countries in order to foster the economic growth in the context of public debt level.

Corruption, public debt and economic growth – evidence from developing countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Carole Ibrahim
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Public Debt ◽  
Economic Effects ◽  
Empirical Literature ◽  
Long Term Effects ◽  
Empirical Examination ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to empirically examine the effect of corruption on public debt and economic growth in 20 developing countries over the period 1996-2018. Design/methodology/approach This study makes use of the autoregressive distributed lag (ARDL) model to detect the long-term relationships, on the one hand, between corruption and public debt and, on the other hand, between corruption and economic growth. Findings The empirical results reveal that corruption increases the debt-to-GDP ratio and that the interactions between corruption and public revenues and between corruption and public spending have a positive influence on public debt in the long run. The estimations also show that high corruption hampers long-term economic growth and increases the negative effect of public debt on economic growth in developing countries. Originality/value While corruption is a prevalent phenomenon in most developing countries, the literature still lacks empirical examination of its economic effects. This study fills this gap with the aim of highlighting that high corruption hinders development in developing nations. This study also examines the impact of the interactions between corruption and components of the fiscal balance on public debt. Moreover, while the existing empirical literature uses regression techniques, this paper uses a panel ARDL approach to detect the long-term effects of corruption.

DETERMINANTS OF TOURISM DEMAND IN INDONESIA: A PANEL DATA ANALYSIS

2020 ◽  
Author(s):  
Muryani Muryani ◽  
Mia Fauzia Permatasari ◽  
Miguel Angel Esquivias Padilla
Keyword(s):  
Global Financial Crisis ◽  
Panel Data Analysis ◽  
Real Income ◽  
Relative Price ◽  
Tourism Demand ◽  
Substantial Impact ◽  
Negative Effect ◽  
Per Capita ◽  
The Impact ◽  
Positive Effect

By 2014 Indonesia registered 11.6 million inbound foreign tourists, 135% higher than the year 2000. Since then, government policies to promote tourism flourished. This paper investigates the determinants of inbound tourism from the top nine mayor tourist origin countries into Indonesia covering the period of 2000 to 2014. This research employs a dynamic panel dataset to estimate the impact of per capita real income, relative prices, accommodation capacity, distance and public infrastructure investment on international tourism demand in Indonesia, capturing demand and supply-side effects. The results show that per capita income of tourist, relative price, and available rooms have a positive effect on tourism expenditure in Indonesia, while distance has a negative effect. Dummy variables capture large negative shocks in tourism arising from two terrorist attacks in 2002 and 2005, as well as from the global financial crisis in 2008. Income plays a positive but low impact on tourism demand compared to other nations. The positive effect of prices suggests an advantage of Indonesia in competitive tourism prices. Nevertheless, low prices also denote low value in tourism services. The substantial impact of accommodation may indicate that significant effects of tourism are allocated in lodging, minimizing the impact on other sectors.

scholarly journals Are Farms Located in Less-Favoured Areas Financially Sustainable? Empirical Evidence from Polish Farm Households

2021 ◽  
Vol 13 (3) ◽  
pp. 1092
Author(s):  
Radosław Pastusiak ◽  
Michał Soliwoda ◽  
Magdalena Jasiniak ◽  
Joanna Stawska ◽  
Joanna Pawłowska-Tyszko
Keyword(s):  
Empirical Evidence ◽  
Precision Agriculture ◽  
Agricultural Policy ◽  
Policy Issue ◽  
Sociodemographic Factors ◽  
Sustainable Growth ◽  
Farm Households ◽  
Agricultural Policies ◽  
Adverse Environmental Conditions ◽  
The Impact

The topic of farms that deal with environmental constraints is an ongoing agricultural policy issue, including within the Common Agricultural Policy. We propose empirical evidence based on a sample of Farm Accountancy Data Network (FADN) farm households, evaluate the influence of chosen factors on financially sustainable farm development and verify less-favoured area (LFA) farms’ growth compared with non-LFA households. To specify farm households, we use the Sustainable Growth Challenge (SGC) model and DuPont decomposition based on financial measures and indicators that were adopted from corporate finance. It is concluded that the differences in SGC and revenue growth values between LFA and non-LFA farms mainly results from the system of subsidising LFA farms that receive compensation for farming in areas with adverse environmental conditions. Generally, the impact of agricultural policies on LFA and non-LFA farms is significant and may weaken the effect on LFA. With the exception of education, other sociodemographic factors do not highly influence farm efficiency. Along with improvements in the quality of human capital (e.g., higher education level), awareness of subsidies, and debt and innovative solutions increases. The interest in precision agriculture and agriculture 4.0 is also growing, which directly translates into better technological and financial efficiency of farms.

scholarly journals Does Economic Growth and Inflation Impact Consumer Confidence during a Pandemic? An Empirical Analysis in EU Countries

2020 ◽  
Vol 3 (1) ◽  
pp. 5-13
Author(s):  
Larissa Bătrâncea
Keyword(s):  
Economic Growth ◽  
Panel Data Analysis ◽  
Negative Influence ◽  
Negative Consequences ◽  
Monetary Policies ◽  
Eu Countries ◽  
Consumer Prices ◽  
Inflation Rates ◽  
Negative Effect ◽  
The Impact

Abstract The study investigates the capacity of European Union member states to face the effects of the economic crisis caused by the COVID-19 pandemic. Namely, by means of a panel data analysis, the study reports on the impact of economic growth (proxied by gross domestic product) and inflation rates (proxied by harmonized indices of consumer prices) on the overall confidence indicator corresponding to 27 EU countries for the period fourth quarter 2019–third quarter 2020. Results showed that inflation had a negative influence on the confidence indicator during the pandemic crisis, while economic growth had no impact. The negative effect triggered by inflation uncovered the impact of monetary policies and fiscal policies on the staggering level of public debt. The study emphasizes that inflation plays a significant role in the market economy, reason for which governments should monitor this factor when trying to stimulate the economy and set appropriate policies for eliminating negative consequences of potential future recession periods.

scholarly journals The Relationship between Competitiveness and Economic Growth: A Panel Data Analysis on Selected Countries

2015 ◽  
Author(s):  
Ziya Çağlar Yurttançıkmaz ◽  
Ömer Selçuk Emsen ◽  
Ahmet Fatih Aydemir ◽  
Ahmet Alkan Çelik
Keyword(s):  
Economic Growth ◽  
Data Analysis ◽  
Panel Data ◽  
Positive Impact ◽  
Panel Data Analysis ◽  
Sustainable Growth ◽  
International Institute ◽  
Data Set ◽  
Business World ◽  
The Impact

As economic growth is very important for the development of individuals and the society, the importance of capital stocks and labor force for the economic growth of countries cannot be neglected. Additionally, the human capital component and especially the role of competitiveness increases on the growth process have been extensively discussed over the last two decades. This paper examines the impact of competitiveness increases on economic growth of selected middle-income countries including Turkey for the period of 1997-2012 using a balanced panel data analysis, which was relatively less studied in the literature. According to analysis results, an increase on the competitiveness index of countries in the panel, which were obtained from the data set of the International Institute for Management Development (IMD), positively increases per capita income level. This result may be interpreted as several factors that increase competitiveness including infrastructure, economic structure, business world and regulations and investments that ensure public efficiency may have a positive impact on economic growth. Therefore, this study suggests that future policies that concentrate on extensive growth instead of intensive dimension may contribute to efficient and sustainable growth.

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