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Public Debt and Economic Growth in Tunisia: An ARDL Analysis

Author

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  • Channoufi Sabrine

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

Abstract

This paper examines the effect of public debt on economic growth in Tunisia over the period 1986-2024. Using an autoregressive distributed lag (ARDL) model, the analysis distinguishes between short-run dynamics and long-run relationships while controlling for inflation, trade openness, population growth, investment and the budget balance. The bounds testing approach indicates the existence of a long-run relationship among the variables. The results suggest that public debt is negatively associated with economic growth in the long run. In the short run, the immediate coefficient of public debt is positive but statistically insignificant, whereas negative effects appear with a delay. These findings are consistent with debt-overhang and crowding-out arguments, but they must be interpreted cautiously because the diagnostic tests reveal residual autocorrelation. The study therefore highlights the importance of debt sustainability, the productive allocation of borrowed resources and the strengthening of fiscal governance in Tunisia.

Suggested Citation

  • Channoufi Sabrine, 2026. "Public Debt and Economic Growth in Tunisia: An ARDL Analysis," Naše gospodarstvo/Our economy, Sciendo, vol. 72(2), pages 1-9.
    • Handle: RePEc:vrs:ngooec:v:72:y:2026:i:2:p:1-9:n:1001
    DOI: 10.2478/ngoe-2026-0007
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    Keywords

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    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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