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Public debt and economic growth: Further evidence euro area

Marta Gómez-Puig () and Simon Sosvilla-Rivero ()

No 201715, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: This paper empirically investigates the short and long run impact of public debt on economic growth. We use annual data from both central and peripheral countries of the euro area (EA) for the 1961-2013 period and estimate a production function augmented with a debt stock term by applying the Autoregressive Distributed Lag (ARDL) bounds testing approach. Our results suggest different patterns across EA countries and tend to support the view that public debt always has a negative impact on the long-run performance of EA member states, whilst its short-run effect may be positive depending on the country.

Keywords: Public debt; economic growth; bounds testing; euro area; peripheral euro area countries; central euro area countries. JEL classification: C22; F33; H63; O40; O52. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-gro
Date: 2017-09, Revised 2017-09
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