Debt-Growth Linkages in EMU Across Countries and Time Horizons
38 Pages Posted: 5 Jul 2016
Date Written: July 4, 2016
This paper contributes to the literature by empirically examining whether the influence of public debt on economic growth differs between the short and the long run and presents different patterns across euro-area countries. To this end, we use annual data from both central and peripheral countries of the European Economic and Monetary Union (EMU) for the 1960-2012 period and estimate a growth model augmented for public debt using the Autoregressive Distributed Lag (ARDL) bounds testing approach. Our findings tend to support the view that public debt always has a negative impact on the long-run performance of EMU countries, whilst its short-run effect may be positive depending on the country.
Keywords: Public debt, economic growth, bounds testing, euro area, peripheral EMU countries, central EMU countries
JEL Classification: C22, F33, H63, O40, O52
Suggested Citation: Suggested Citation