Debt-Growth Linkages in EMU Across Countries and Time Horizons

38 Pages Posted: 5 Jul 2016

See all articles by Marta Gómez-Puig

Marta Gómez-Puig

Economic Theory Department. University of Barcelona

Simon Sosvilla-Rivero

UCM Institute for Economic Analysis

Date Written: July 4, 2016

Abstract

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

Gómez-Puig, Marta and Sosvilla-Rivero, Simon, Debt-Growth Linkages in EMU Across Countries and Time Horizons (July 4, 2016). Available at SSRN: https://ssrn.com/abstract=2804684 or http://dx.doi.org/10.2139/ssrn.2804684

Marta Gómez-Puig

Economic Theory Department. University of Barcelona ( email )

Diagonal 690
Barcelona, 08034
Spain
34-93-4020113 (Phone)
34-93-4039082 (Fax)

Simon Sosvilla-Rivero (Contact Author)

UCM Institute for Economic Analysis ( email )

Carretera de Humera s/n
Madrid, Madrid 28223
Spain
+34913932626 (Phone)

HOME PAGE: http://www.ucm.es/info/ecocuan/ssr/

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