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On the determinants of economic growth: Empirical evidence from the Eurozone countries

Author

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  • Panagiotis Pegkas

    (School of Science, University of Thessaly, Greece)

  • Christos Staikouras

    (School of Business Administration, Athens University of Economics and Business, Greece)

  • Constantinos Tsamadias

    (Department of Home Economics and Ecology, Harokopio University of Athens, Greece)

Abstract

This study empirically investigates the causal relationship between economic growth and several factors (investment, human capital, trade openness and public debt) in the Eurozone countries, where imbalances persist several years after the financial crisis. The results reveal a long-run relationship between variables and public debt, as investment, human capital and trade openness positively affect growth. On the other hand, there is a negative long-run effect of public debt on growth. Furthermore, the results indicate that there is long-run unidirectional causality running from investment, trade openness and human capital to growth and bidirectional causality between public debt and growth. The overall results reveal that Eurozone countries should base their growth strategies on fiscal consolidation, increasing exports, correcting the use of public investment and improving the quality of human capital, especially in higher education.

Suggested Citation

  • Panagiotis Pegkas & Christos Staikouras & Constantinos Tsamadias, 2020. "On the determinants of economic growth: Empirical evidence from the Eurozone countries," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 23(2), pages 210-229, June.
    • Handle: RePEc:sae:intare:v:23:y:2020:i:2:p:210-229
    DOI: 10.1177/2233865920912588
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