scholarly journals GOVERNMENT INDEBTEDNESS AND ECONOMIC GROWTH IN THE REPUBLIC OF NORTH MACEDONIA

2020 ◽  
Author(s):  
Martin Noveski ◽  
Nina Mojsova Kjoseva ◽  
Sasho Kjosev
Keyword(s):  
Economic Growth ◽  
Least Squares ◽  
Public Debt ◽  
Turning Point ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Reverse Causality ◽  
General Government ◽  
Non Linear ◽  
The Republic

Government consumption plays an important role for stability of the national economy, especially in periods of economic crisis. However, 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 a form of inverted U-shape. In other words, it is believed that after a certain threshold, public debt will have negative impact on economic growth. 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. For this purpose, we use non-linear multiple regression model for real GDP growth rate as dependent variable, general government public debt-to-GDP ratio (in nominal and squared terms) as key independent variable, as well as several other controlling variables. Since theory also suggests reverse causality between economic growth and public debt, we use three different estimation techniques (Ordinary Least Squares, Two-Stages Least Squares, and Generalized Method of Moments) to deal with potential endogeneity, as well as to cross-validate the results. 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 negative impact. Given that current debt level is slightly above 40% (10 percentage points higher than the turning point), whereby due to the COVID-19 crisis it is expected to grow even more in the upcoming years, the need of urgent fiscal consolidation inevitably arises. In this regards, deeper and more comprehensive analysis is needed in order to identify adequate channels for its efficient and effective implementation.

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.

scholarly journals The Impact of Public Debt on the Economic Growth of Jordan: An Empirical Study (2000- 2015)

2017 ◽  
Vol 6 (2) ◽  
pp. 114 ◽  
Author(s):  
Tawfiq Ahmad Mousa ◽  
Abudallah. M. LShawareh
Keyword(s):  
Economic Growth ◽  
Empirical Study ◽  
Regression Model ◽  
Least Squares ◽  
Public Debt ◽  
Least Squares Method ◽  
Negative Impact ◽  
External Debt ◽  
Using Data ◽  
The Impact

In the last two decades, Jordan’s economy has been relied on public debt in order to enhance the economic growth. As such, an understanding  of the dynamics between public debt and economic growth is very important in addressing the obstacles to economic growth. The study investigates the impact of public debt on economic growth using data from 2000 to 2015. The study employs least squares method and regression model to capture the impact of public debt on economic growth. The results of the analysis indicate that there is a negative impact of total public debt, especially the external debt on economic growth. 

Mandatory CSR expenditure and stock return

2020 ◽  
Vol 28 (6) ◽  
pp. 951-975
Author(s):  
Asit Bhattacharyya ◽  
Md Lutfur Rahman
Keyword(s):  
Least Squares ◽  
Stock Returns ◽  
Least Squares Method ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Reverse Causality ◽  
Endogeneity Bias ◽  
Content Type ◽  
The Impact

Purpose India has mandated corporate social responsibility (CSR) expenditure under Section 135 of the Indian Companies Act, 2013 – the first national jurisdiction to do so. The purpose of this paper is to examine the impact of mandated CSR expenditure on firms’ stock returns by using actual CSR spending data, whereas the previous studies mostly focus on voluntary CSR proxied by CSR scores. Design/methodology/approach The authors estimate their baseline regression by using ordinary least squares(OLS) method. Although the baseline regression involving CSR expenditure and stock returns using ordinary least squares method are estimated, endogeneity and reverse causality biases are addressed by using two-stage least squares and generalized method of moments approaches. These approaches contribute mitigating endogeneity bias and biases associated with unobserved heterogeneity and simultaneity. Findings The findings document that mandatory CSR expenditure has a negative impact on firms’ stock returns which supports the “shareholders” expense’ view. This result remain robust after controlling for endogeneity bias and the use of both standard and robust test statistics. The authors however observe that this result holds for the firms with actual CSR expenditure equal to the mandated amount but does not hold for the firms with actual CSR expenditure greater than the mandated amount. Therefore, the authors provide evidence that CSR expenditure’s impact on stock returns depends on whether firms simply comply the regulation or voluntarily chose an amount of CSR expenditure above the mandated amount. Originality/value The primary contribution is to present a valid and robust evidence of negative effect of mandated CSR spending on firms’ stock returns when the mandatory CSR spending rule is already in place. This study contributes by examining the impact of mandated CSR spending on stock during post-implementation period (2015-2017), whereas other studies by Dharampala and Khanna (2018); Kapoor and Dhamija (2017); and Mukherjee et al. (2018) mainly examined the impact of legislation on Indian CSR. The authors use mandated actual CSR expenditure, whereas previous studies mostly focus on voluntary CSR proxied by CSR scores.

scholarly journals An Empirical Analysis of Stock Market Development and Economic Growth: The Case of Macedonia

2016 ◽  
Vol 11 (2) ◽  
pp. 71-81 ◽  
Author(s):  
Darko Lazarov ◽  
Emilija Miteva-Kacarski ◽  
Krume Nikoloski
Keyword(s):  
Economic Growth ◽  
Comparative Analysis ◽  
Stock Market ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Generalized Method Of Moments ◽  
Market Development ◽  
Stock Market Development ◽  
Republic Of Macedonia ◽  
The Republic

Abstract This paper has two goals. The first goal is to investigate the influence of stock market development on economic growth for a group of 14 transition economies from the Central and South-East European (CSEE) region in the period 2002-2012, while the second is to analyze the main characteristics and specificities of the stock market in the Republic of Macedonia. To fulfil the first goal, we apply panel regression models (fixed and random effects) and a dynamic panel model (Generalized Method of Moments – GMM), while we use a single country approach and comparative analysis to examine the main characteristics of the Macedonian stock market. The estimated results indicate that stock market development is positive and significantly correlated with economic growth. Additionally, the comparative analysis of the stock market in the Republic of Macedonia suggests that the Macedonian stock market is still underdeveloped and faces a number of challenges before it can enter a new phase of development after the negative impact of the global financial crisis. Those challenges include capital market regional integration and the harmonization of legal and institutional frameworks such as bankruptcy procedures, accounting and reporting standards, public sector regulatory bodies, corporate governance and a liberalized trade regime.

scholarly journals Effects of External Public Debt Cancellation on the Economic Growth of the Republic Of Congo

2021 ◽  
Vol 7 (02) ◽  
Author(s):  
Lauric NGOUEMBE ◽  
Jean-Anaclet Mampassi
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Negative Impact ◽  
Positive Impact ◽  
Temporal Data ◽  
Short Term ◽  
Republic Of Congo ◽  
Debt Cancellation ◽  
The Republic

This study, through temporal data and the ARDL process, examined the effects of the cancellation of external public debt on economic growth in the Republic of Congo over the 1990 to 2016 period. From this review, it appears that debt cancellation has a positive impact on economic growth over the short-term and a negative impact over the long term. Beyond these results, we believe that additional research is needed to examine the channels through which external public debt cancellation influence economic growth in the Republic of Congo.

scholarly journals Role of Governance in Debt-Growth Relationship: Evidence from Panel Data Estimations

2021 ◽  
Vol 13 (11) ◽  
pp. 5954
Author(s):  
Qamar Abbas ◽  
Li Junqing ◽  
Muhammad Ramzan ◽  
Sumbal Fatima
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Negative Impact ◽  
Positive Impact ◽  
Linear Pattern ◽  
The Public ◽  
Mediating Role ◽  
National Output ◽  
State Governance

This paper provides an empirical analysis of the relationship between debt and national output mediated by a measure of the quality of state governance. Using WGIs dataset of 106 countries for the period 1996–2015, the paper analyzes the mediated effect of governance on debt-growth relationship. For this purpose, we use the fixed effect (LSDV) and system GMM estimation technique in order to overcome the possible problem of endogeneity. Results show the non-linear pattern between public debt and economic growth via governance. Although, public debt has negative impact on economic growth, but the results are statistically positive and significant when public debt is interacted with governance, which confirms that governance is a channel by which public debt influences economic growth. Moreover, we calculate the threshold of governance which shows that the public debt has positive impact on economic growth when the governance level is higher than the threshold and adversely affects the economic growth in the case of low level of governance than threshold. Evidence from this study reveals the fact that governance plays a mediating role in debt-growth relationship as there is a pattern of complementarity between public debt and governance: the higher the level of governance, the lesser the adverse effect of public debt on economic growth.

Shadow Economy, Corruption, and Economic Growth: An Empirical Analysis

2019 ◽  
Vol 47 (3) ◽  
pp. 276-294 ◽  
Author(s):  
Nedra Baklouti ◽  
Younes Boujelbene
Keyword(s):  
Economic Growth ◽  
Least Squares ◽  
Public Administration ◽  
Method Of Moments ◽  
Fixed Effects ◽  
Shadow Economy ◽  
Generalized Method Of Moments ◽  
Ordinary Least Squares ◽  
Negative Effects ◽  
Considerable Debate

There is considerable debate over the effects of both corruption and shadow economy on growth, but few studies have considered how the interaction between them might affect economic growth. We study how corruption levels in public administration affect economic growth and how this effect depends on the shadow economy. Using Ordinary Least Squares (OLS), fixed effects, and system generalized method of moments (GMM) on a dataset of 34 OECD countries over the period 1995-2014. The estimation results indicate that increased corruption and a larger shadow economy lead to decrease in economic growth. Results additionally indicate that the shadow economy magnifies the effect of corruption on economic growth. These results imply significant complementarities between corruption and the shadow economy, suggesting that the reduction of corruption will lead to a fall in the size of the shadow economy and will also reduce the negative effects of corruption on economic growth through the underground economy.

scholarly journals Empirical Evidence on Factors Conditioning the Turning Point of the Public Debt–Growth Relationship

Economies ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 191
Author(s):  
Mindaugas Butkus ◽  
Diana Cibulskiene ◽  
Lina Garsviene ◽  
Janina Seputiene
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Private Consumption ◽  
Turning Point ◽  
Global Financial Crisis ◽  
Government Expenditure ◽  
The Public ◽  
Taxation Policy ◽  
High Expenditure ◽  
The Global Financial Crisis

This paper contributes to the limited literature on the factors conditioning the turning point of the public debt–growth relationship. A decade after the global financial crisis, when the debt ratio in many countries was still above pre-crisis levels, the COVID-19 pandemic again increased the pressure on public finances. It revived the debate on the ability to promote economic recovery through debt-financed government expenditure. However, more intense government borrowing increases its costs and uncertainty about future taxation policy, thus potentially disturbing private consumption, investment, and economic growth. In this paper, we estimate the thresholds of indicators on which the expenditure multiplier depends, which may already imply a risk that public debt will dampen economic growth. We use a methodology of structural threshold regression to examine the varying effects that debt might have on growth using consumption, investment, taxes, and imports as threshold variables, as well as several other factors suggested by previous contributions. The applied methodology allows for the addressing of parameter heterogeneity and endogeneity to be accounted for at the same time. The main results suggest that a positive debt effect is more likely if the conditions for a high expenditure multiplier are met, that an increase in the public-debt-to-GDP ratio is not necessarily deleterious to growth if shares of private consumption and investment in GDP are high, while the tax-revenue-to-GDP ratio is low.

scholarly journals Effects of Software Piracy on Economic Growth

2018 ◽  
Vol 10 (6) ◽  
pp. 1
Author(s):  
Rodrigo Nobre Fernandez ◽  
Felipe Garcia Ribeiro ◽  
Jean Marcel Del Ponte Duarte
Keyword(s):  
Economic Growth ◽  
Data Structure ◽  
Panel Data ◽  
Fixed Effects ◽  
Negative Impact ◽  
Software Piracy ◽  
The World ◽  
Non Linear

This study investigates the effects of software piracy on economic growth around the world for the years 2000 to 2014, using panel data structure with fixed effects to capture this relationship, plus year dummies. Our findings suggest, in general, that software piracy has a negative impact on growth and that this relationship seems to be non-linear.

Fiscal policy as a source of economic growth

2017 ◽  
pp. 5-26 ◽  
Author(s):  
A. Kudrin ◽  
A. Knobel
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Negative Impact ◽  
Potential Effect ◽  
Structure Change ◽  
Fiscal Multiplier ◽  
Multiplicative Effect ◽  
General Government ◽  
Multiplicative Effects

We investigate mechanisms of budget expenditures structure influence on economic development. General government fiscal multiplier in various functional directions is estimated. We show that productive expenses in general have bigger multiplicative effect on GDP, than unproductive ones. By means of multiplicative effects models estimation for various functional items we calculate potential effect on economic growth of the budget maneuver in favor of productive expenses and the implemented effect of the recent years budget expenditures structure change. We show that resources redistribution from non-productive expenses to productive ones could increase long-term rates of economic growth approximately by 0,8 p. p. per year. On the contrary, the budget expenditures structure change observed during 2011-2017 has a negative impact on average annual rates of economic growth about 0,3 p. p. per year.

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