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“Short-run and long-run effects of public debt on economic performance: Evidence from EMU countries”

Author

Listed:
  • Marta Gómez-Puig

    (Faculty of Economics, University of Barcelona)

  • Simón Sosvilla-Rivero

    (Complutense Institute for International Studies, Universidad Complutense de Madrid)

Abstract

This paper contributes to the literature by examining the possible influence of public debt on economic performance, using data from both central and peripheral countries of the European Economic and Monetary Union for the 1960-2012 period. To this end, a simple aggregate production function augmented for public debt is estimated using the ARDL bounds testing approach. Our findings tend to support the view that the level of public debt always has a negative impact on the long-run performance of EMU countries, whilst its short-run effect may be positive in some specific cases.

Suggested Citation

  • Marta Gómez-Puig & Simón Sosvilla-Rivero, 2015. "“Short-run and long-run effects of public debt on economic performance: Evidence from EMU countries”," IREA Working Papers 201522, University of Barcelona, Research Institute of Applied Economics, revised Sep 2015.
    • Handle: RePEc:ira:wpaper:201522
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    References listed on IDEAS

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    More about this item

    Keywords

    Public debt; economic growth; bounds testing; euro area; peripheral EMU countries; central EMU countries. JEL classification: C22; F33; H63; O40; O52;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • 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
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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