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Even Worse than You thought: The Impact of Public Debt on Aggregate Investment and Productivity

Simone Salotti and Carmine Trecroci ()

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: In this paper, we empirically assess the impact of government debt on two key determinants of long-term growth, i.e., private investment and productivity, on a panel of 20 OECD economies from 1970 to 2009. Our main finding is that high public debts are followed by significant and linear declines of both aggregate investment spending and productivity growth. Our analysis also finds evidence supporting conditional convergence of productivity growth among OECD countries.

Keywords: government debt; economic growth; investment; productivity (search for similar items in EconPapers)
JEL-codes: E62 H63 O47 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2012-09
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Persistent link: https://EconPapers.repec.org/RePEc:deg:conpap:c017_020

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