Does Public Debt Crowd Out Public Investment in Central and Eastern European economies? A Dynamic Approach Using CS-ARDL

Milena Konatar, Jovan Đurašković, Nemanja Popović and Milivoje Radović

Prague Economic Papers, 2025, vol. 2025, issue 1, 26-44

Abstract: This study estimates the impact of public debt on public investment in Central and Eastern European (CEE) economies. We implement Cross-sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) model, which effectively handles cross-sectional dependence and slope heterogeneity, while dealing with short- and long-run coefficients simultaneously. The results indicate the existence of both short- and long-term crowding out effects of public debt on public investment in the CEE region. These findings have significant fiscal policy repercussions, particularly in context marked by constrained financial resources and substantial debt loads, as has been the case in a number of CEE economies.

Keywords: public debt; public investment; CEE countries; CS-ARDL (search for similar items in EconPapers)
JEL-codes: C33 E22 E60 O52 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://pep.vse.cz/doi/10.18267/j.pep.887.html (text/html)
http://pep.vse.cz/doi/10.18267/j.pep.887.pdf (application/pdf)
free of charge

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:prg:jnlpep:v:2025:y:2025:i:1:id:887:p:26-44

Ordering information: This journal article can be ordered from
Editorial office Prague Economic Papers, University of Economics, nám. W. Churchilla 4, 130 67 Praha 3, Czech Republic
http://pep.vse.cz

DOI: 10.18267/j.pep.887

Access Statistics for this article

Prague Economic Papers is currently edited by Klára Pavlová

More articles in Prague Economic Papers from Prague University of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Stanislav Vojir ().