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New Evidence from Government Debt and Economic Growth in Core and Periphery European Union Countries : Asymmetric Panel Causality

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  • İbrahim ÖZMEN

    (Department of Public Finance, Aksehir Faculty of Economics and Administrative Sciences, Selcuk University, Aksehir, 42550, Konya, Turkey.)

Abstract

This paper aims to investigate the asymmetric panel causality between general government debt and economic growth for European Union core and periphery countries using annual data from 1980 to 2018. The results show that there is evidence for different combinations of the asymmetric causality relationship between variables. Also, while the inner core panel group and individual results are partially inconsistent, the results regarding the periphery constitute integrity. On one hand core results may indicate the presence of different and powerful factors that lead to positive and negative effects. On the other hand, the general government debt increased in the periphery refers to positive causal effects on economic growth. Besides, while general government debt and economic growth variables indicate cross-sectional dependency, the variables are homogeneous for both panels.

Suggested Citation

  • İbrahim ÖZMEN, 2022. "New Evidence from Government Debt and Economic Growth in Core and Periphery European Union Countries : Asymmetric Panel Causality," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 167-187, October.
    • Handle: RePEc:rjr:romjef:v::y:2022:i:3:p:167-187
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    More about this item

    Keywords

    public debt; growth; fiscal policy; asymmetric panel causality;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General

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