The Impact of Public Debt on the Economic Growth in South Eastern Europe: An Empirical Panel Investigation

Burim Gashi

Economic Studies journal, 2020, issue 2, 3-18

Abstract: The goal of this paper is to examine the impact of public debt in six countries from South-Eastern Europe over the period 2008 to 2017, by applying three different panel methods: the fixed effects model, the GMM method and the system-GMM method. More specifically, we investigate if there is evidence of a non-linear (quadratic) relationship in this group of countries. The results of our study confirm that increasing public debt has a statistically significant negative influence on the GDP growth. Also, the results confirm the existence of a „U inverted” relationship, with a maximum debt threshold of about 58% of GDP. After this threshold, public debt is expected to negatively affect the economic growth rate, due to fear of public debt unsustainability higher interest rates, and severe budgetary consolidation measures.

JEL-codes: E62 H63 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bas:econst:y:2020:i:2:p:3-18

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