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Analyzing the Tripartite Relationship Among Public Debt, Economic Growth, and Political Risks: A Panel VAR Approach

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  • Ben Hamouda Abderrazek

    (Department of Economics, Faculty of Economics and Management of Tunis, University of Tunis El Manar, Tunis, Tunisia)

Abstract

This study examines the triangular relationship between public debt, economic growth, and political risks, shedding light on the complex underlying dynamics of these factors. Using a Panel Vector Autoregressive (PVAR) model, we analyze this relationship from multiple angles across 117 countries. The study considers the impact of different political regimes and income levels, recognizing the importance of diverse economic and political contexts in shaping these interactions. The results reveal varied responses to public debt based on the political regime, highlighting that authoritarian systems, imperfect democracies, and full democracies exhibit distinct reactions. Additionally, the study underscores the influence of income levels on the relationship between public debt and economic growth. A balanced and comprehensive approach to public debt management is recommended, with an emphasis on political stability, transparency in political institutions, and economic diversification. Policymakers are advised to consider the duration of shocks to promote sustainable economic growth and fiscal health.

Suggested Citation

  • Ben Hamouda Abderrazek, 2024. "Analyzing the Tripartite Relationship Among Public Debt, Economic Growth, and Political Risks: A Panel VAR Approach," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 30(1), pages 77-116, February.
    • Handle: RePEc:bpj:pepspp:v:30:y:2024:i:1:p:77-116:n:3
    DOI: 10.1515/peps-2023-0054
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    More about this item

    Keywords

    public debt; political risks; economic growth; Panel Vector Autoregressive (PVAR) approach;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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