IDEAS home Printed from https://ideas.repec.org/a/eee/ecofin/v83y2026ics1062940825002141.html

The debt-growth nexus in Canada: evidence from an open-economy ARDL model

Author

Listed:
  • Zestos, George K.
  • Jiang, Yixiao
  • Winder, Robert C.
  • Matzen, Charles

Abstract

This study investigates the long-run relationship between public debt and economic growth in Canada from 1960 to 2022 using an Autoregressive Distributed Lag (ARDL) model. By incorporating key macroeconomic variables such as world GDP, the current account balance, and long-term interest rates, the analysis captures the macroeconomic dynamics of Canada’s small open economy. The findings reveal a negative relationship between public debt and economic growth in Canada, suggesting that fiscal prudence is crucial for sustained economic performance. Specifically, a 1% annual increase in public debt results in a 0.6–0.7% reduction in real GDP. Moreover, external factors such as global economic conditions and interest rates significantly influence Canada’s economic trajectory. These insights offer valuable policy implications not only for Canada, but also for similar open economies grappling with rising public debt levels.

Suggested Citation

  • Zestos, George K. & Jiang, Yixiao & Winder, Robert C. & Matzen, Charles, 2026. "The debt-growth nexus in Canada: evidence from an open-economy ARDL model," The North American Journal of Economics and Finance, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:ecofin:v:83:y:2026:i:c:s1062940825002141
    DOI: 10.1016/j.najef.2025.102574
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1062940825002141
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.najef.2025.102574?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecofin:v:83:y:2026:i:c:s1062940825002141. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620163 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.