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Title: Impact of Public Debt on Economic Growth in Advanced Economies
Authors: Serrão, Amílcar
Keywords: Public Debt
Economic Growth
Issue Date: 1-Feb-2016
Publisher: International Journal of Managerial Studies and Research (IJMSR)
Abstract: This paper examines the impact of public debt on the economic growth in advanced economies over a period of 1946 to 2009, using an econometric approach. The findings suggested an inverse relationship between public debt and economic growth in advanced economies. These relationships were found to be significant as well. Model results also show that the real GDP growth rate does not decline sharply whether the public debt-to-GDP ratio is lower than 220%. The public debt-to-GDP ratio elasticity of the real growth rate shows that an increase of 1% in public debt/GDP category above 120% decreases the real GDP growth rate in 1.13%. The negative effect of public debt is only stronger on the real GDP growth rate in advanced economies when the public debt-to-GDP ratio is above 220%. Finally, these findings lead us to reassess the austerity agenda, and the governments should devise new strategies for public debt management in advanced economies, taking into account their economic and financial performance.
Type: article
Appears in Collections:GES - Publicações - Artigos em Revistas Internacionais Com Arbitragem Científica

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