THE INFLUENCE OF INTEREST RATES ON ECONOMIC GROWTH

Miloš Paunović

Ekonomske ideje i praksa, 2022, issue 47, 69-80

Abstract: Today, the total world debt is several times higher than the total world production. Interest, which is an integral part of debt, is therefore a variable that can significantly affect economic and overall social developments. The subject of the analysis of this paper is to consider the impact that interest rates have on economic growth. The conducted analysis based on secondarily available data showed that interest rates (observed in absolute amounts) negatively affect economic growth, ie that the accumulation of debt and interest affects the reduction of economic growth rates. Also, the analysis showed that the reduction of interest rates did not result in higher rates of economic growth, which is contrary to the assumptions of many theoretical concepts.

Keywords: interest rate; real output; public debt (search for similar items in EconPapers)
JEL-codes: E40 H63 O42 (search for similar items in EconPapers)
Date: 2022
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