Public debt and economic growth: Further evidence for the euro area

Marta Gómez-Puig and Simon Sosvilla-Rivero

No 1709, Working Papers del Instituto Complutense de Estudios Internacionales from Universidad Complutense de Madrid, Instituto Complutense de Estudios Internacionales

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. (search for similar items in EconPapers)
JEL-codes: C22 F33 H63 O40 O52 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2017
New Economics Papers: this item is included in nep-gro
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Journal Article: Public Debt and Economic Growth: Further Evidence for the Euro Area (2018)
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