Is the Rising Public Debt a Threat to the US Economic Growth? An Empirical Investigation Using ARDL Approach

Yixiao Jiang (), George Zestos, Robert Winder and Alex Hamed
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Yixiao Jiang: Western New England University
George Zestos: Christopher Newport University
Robert Winder: Christopher Newport University
Alex Hamed: Christopher Newport University

Chapter Chapter 19 in Advances in Applied Macroeconomics, 2025, pp 373-391 from Springer

Abstract: Abstract This study attempts to determine the relationship between the public debt-to-gross domestic product (GDP) ratio and the rate of real economic growth in the United States using a quadratic autoregressive distributed lag (ARDL) model. Based on the data from 1960 to 2019, the authors find that further expanding national debt will restrain economic growth after the level of public debt exceeds 64% of GDP. A series of Granger causality tests reveal that the debt-to-GDP ratio Granger causes GDP growth, but indirectly through the interest rate. The results indicate that one way to mitigate the downside of expanding national debt is to meticulously manage interest rate risk.

Keywords: ARDL; Debt–growth relationship; Threshold analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-76658-9_19

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DOI: 10.1007/978-3-031-76658-9_19

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