Debt, growth and inflation in large European economies: a vector auto-regression analysis

Majid Taghavi ()
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Majid Taghavi: Economics Division, University of Northumbria at Newcastle, Newcastle upon Tyne NE1 8ST, UK

Journal of Evolutionary Economics, 2000, vol. 10, issue 1, 159-173

Abstract: This paper attempts to empirically test the hypothesis that whether debt matters in the EU. This has been performed by examining the potential adverse effects of debt in large European economies on investment, inflation and growth. Using the hybrid cointegration and vector autoregressive models, the findings, based on the period 1970-97, suggest that debt causes significant adverse effects on investment, but its impact on growth is not clear-cut. Moreover, debt appears to be inflationary in most cases in the long run, though produces no clear short run pattern on inflation.

Keywords: Cointegration; -; Convergence; -; Debt; ratio; -; Deficit; ratio; -; Vector; autoregression (search for similar items in EconPapers)
JEL-codes: C3 H6 (search for similar items in EconPapers)
Date: 2000-01-04
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Citations: View citations in EconPapers (17)

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