Does Government Debt Promote Economic Growth? An Empirical Analysis with Structural Breaks for the Economy of China

Stylianou Tasos ()
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Stylianou Tasos: University of Macedonia, Department of Applied Informatics

Romanian Economic Journal, 2012, vol. 15, issue 45, 229-248

Abstract: This paper investigates the relationship between economic growth and government debt for one of the biggest economies in the world, the economy of China. The data were fitted into a regression equation using econometric techniques such as unit root tests and Granger causality. Regarding unit root tests we are using three kind of tests: i) The conventional unit tests, which do not take into account structural breaks, ii) the unit root tests that take into account one structural break and iii) tests that take into account multiple structural breaks. The analysis is based on data over the period 1984 to 2011 for China. The results reveal that there are structural breaks in the economy of China but no Granger causality between the variables.

Keywords: Economic growth; Government Debt, Unit Root tests, Structural Breaks, Bai Perron Test, Granger causality (search for similar items in EconPapers)
JEL-codes: A10 C32 N15 O40 (search for similar items in EconPapers)
Date: 2012
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