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Public debt and economic growth: Further evidence euro area

Author

Listed:
  • Marta Gómez-Puig

    (Risckcenter Research group–IREA. Av. Diagonal 696; 08034 Barcelona,Spain.)

  • Simón Sosvilla-Rivero

    (Complutense Institute for International Studies, Universidad Complutense de Madrid; 28223 Madrid, Spain.)

Abstract

This paper empirically investigates the short and long run impact of public debt on economic growth. We use annual data from both central and peripheral countries of the euro area (EA) for the 1961-2013 period and estimate a production function augmented with a debt stock term by applying the Autoregressive Distributed Lag (ARDL) bounds testing approach. Our results suggest different patterns across EA countries and tend to support the view that public debt always has a negative impact on the long-run performance of EA member states, whilst its short-run effect may be positive depending on the country.

Suggested Citation

  • Marta Gómez-Puig & Simón Sosvilla-Rivero, 2017. "Public debt and economic growth: Further evidence euro area," IREA Working Papers 201715, University of Barcelona, Research Institute of Applied Economics, revised Sep 2017.
    • Handle: RePEc:ira:wpaper:201715
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    3. Daniele, SCHILIRO', 2019. "Public debt and growth in Italy:Analysis and policy proposals," MPRA Paper 97950, University Library of Munich, Germany, revised Nov 2019.

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    More about this item

    Keywords

    Public debt; economic growth; bounds testing; euro area; peripheral euro area countries; central euro area 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

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