ASYMMETRIC IMPACT OF PUBLIC DEBT ON ECONOMIC GROWTH IN SELECTED EU COUNTRIES

• Authors: Šuliková Veronika , Mihajlo Djukic , Vladimír Gazda , Denis Horváth , Lumír Kulhánek
• Languages of publication: EN

Abstracts

EN

The paper explores the asymmetric relation between public debt and economic growth in 13 EU countries in the period 1993 – 2013. A panel data model uncovers a linear relation between debt-to-GDP decrease and GDP growth, while the relation between the debt-to-GDP increase and GDP growth is defined by an inverted U-shaped curve (parabola) with the peak at a 64% debt-to-GDP ratio. We identified two main patterns in relations between debt-to-GDP and GDP growth: (i) hysteresis loop – country data trace the closed circle defined within the debt interval [53%, 113%] (Austria, Finland, Denmark) and (ii) debt trap – country debt-to-GDP ratio breaks the 113% level and indebtedness increase followed by the GDP fall is tracing the diverging tail of parabola (debt trap in Greece, Italy, Portugal).

Keywords

EN

PUBLIC DEBT; ECONOMIC GROWTH; DEBT TRAP; DYNAMIC PANEL DATA MODELS; NON-LINEAR RELATION; ASYMMETRIC RELATION; EU

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2015
• Volume: 63
• Issue: 9
• Pages: 944 – 958

Contributors

author

Šuliková Veronika

• Technical University of Košice, Faculty of Economics, Department of Finance, Němcovej 32, 040 01 Košice, Slovak Republic

author

Mihajlo Djukic

author

Vladimír Gazda

author

Denis Horváth

author

Lumír Kulhánek