Debt and Economic Growth in the European Union: A Panel Granger Causality Approach

Candida Ferreira

International Advances in Economic Research, 2016, vol. 22, issue 2, No 2, 149 pages

Abstract: Abstract This paper contributes to empirical investigation of the causality relationships between real gross domestic product (GDP) growth and the growth of three debt categories, namely public, foreign and private debt, in the universe of the 28 European Union (EU) countries during the past decade. Using panel Granger causality estimations, we find statistically relevant bidirectional causality relationships between public debt and economic growth for the periods both before and after the outbreak of the recent financial crisis. Moreover, there is clear evidence of economic growth’s contribution to decreasing public debt.

Keywords: Panel Granger causality; European Union; GDP growth; Public debt; Foreign debt; Private debt; E42; E62; G15; O40 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s11294-016-9575-y

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