Public Debt, Economic Openness, And Sustainable Economic Growth in Europe: A Dynamic Panel Causal Analysis

Rudra P. Pradhan, Mak Arvin, Mahendhiran Nair and John H. Hall
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Rudra P. Pradhan: Indian Institute of Technology, India
Mahendhiran Nair: Sunway University Malaysia
John H. Hall: University of Pretoria, South Africa

Journal of Economic Development, 2022, vol. 47, issue 1, 167-183

Abstract: This paper examines the short-term and long-term dynamics between public sector debt, economic openness, and economic growth in European countries between 1990 and 2018. Using the panel vector error correction model, we find that both public debt and economic openness contribute to long-term economic growth in European countries. The empirical analysis also shows that there are strong endogenous links between public debt, economic openness and economic growth in Europe in the short run. These relationships suggest that governments in Europe should give careful attention to the co-curation of macroeconomic policies pertaining to public sector spending/taxation, economic openness, and economic growth.

Keywords: Public Debt; Economic Openness; Economic Growth; European Countries (search for similar items in EconPapers)
JEL-codes: E31 E44 O16 O43 (search for similar items in EconPapers)
Date: 2022
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