On the impact of public debt on economic growth

• Atul A. Dar ^[1] ; Sal AmirKhalkhali ^[1]
  1. [1] Saint Mary's University

     Saint Mary's University

     Canadá

     
• Localización: Applied econometrics and international development, ISSN 1578-4487, Vol. 14, Nº. 1, 2014, págs. 21-32
• Idioma: inglés
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• Resumen

  • It is generally agreed that the rapidrise of public debt in most of the developed countries can be traced to the recent financial crisis, and the accompanying slump contributed to this problem. This has sparked debate about the likely adverse macroeconomic impacts of persistent large debts especially on long-term economic growth. In this paper, we attempt to contribute to this debate by examining the impact of public debt on economic growth in 23 OECD countries classified into four groups in terms of their average debt-to-GDP ratio over the 1996-2007 period. We use a general empirical methodology, which is also likely to be better able to represent the law relatingeconomic growth to its determinants. Our empirical resultsindicate that the marginal impact of debt is negative but very small and statistically insignificant in almost all cases.