Does debt predict growth? An empirical analysis of the relationship between total debt and economic output
Although the recent global financial crisis has stimulated a vast amount of research on the impact of public debt on economic growth and also increasingly on the role of private credit, the total levels of indebtedness of an economy have largely been ignored. This paper studies the impact of the tot...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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University of A Coruna
2015-12-01
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| Series: | European Journal of Government and Economics |
| Subjects: | |
| Online Access: | http://revistas.udc.es/index.php/ejge/article/view/4308 |
| _version_ | 1819260753552605184 |
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| author | Willem Vanlaer Wim Marneffe Lode Vereeck Johan Vanovertveldt |
| author_facet | Willem Vanlaer Wim Marneffe Lode Vereeck Johan Vanovertveldt |
| author_sort | Willem Vanlaer |
| collection | DOAJ |
| description | Although the recent global financial crisis has stimulated a vast amount of research on the impact of public debt on economic growth and also increasingly on the role of private credit, the total levels of indebtedness of an economy have largely been ignored. This paper studies the impact of the total level of and increases in debt-to-GDP on economic growth for 26 developed countries in the short, medium and longer term. We analyse whether we can predict the future level of growth, simply by looking at the total level of debt, or increases in that debt level. We find that there is a negative correlation between high levels of debt and short term economic growth, but that this effect tapers in the medium and long term. Similarly, we find that rapid debt accumulation is negatively related to economic growth over the short term, the impact is less pronounced over the medium term and is non-existent over the long term. |
| first_indexed | 2024-12-23T19:30:55Z |
| format | Article |
| id | doaj.art-d363440bf1b64060a62f9d749d5a5038 |
| institution | Directory Open Access Journal |
| issn | 2254-7088 |
| language | English |
| last_indexed | 2024-12-23T19:30:55Z |
| publishDate | 2015-12-01 |
| publisher | University of A Coruna |
| record_format | Article |
| series | European Journal of Government and Economics |
| spelling | doaj.art-d363440bf1b64060a62f9d749d5a50382022-12-21T17:33:56ZengUniversity of A CorunaEuropean Journal of Government and Economics2254-70882015-12-014210.17979/ejge.2015.4.2.4308Does debt predict growth? An empirical analysis of the relationship between total debt and economic outputWillem Vanlaer0Wim Marneffe1Lode Vereeck2Johan Vanovertveldt3Hasselt UniversityHasselt UniversityHasselt UniversityHasselt UniversityAlthough the recent global financial crisis has stimulated a vast amount of research on the impact of public debt on economic growth and also increasingly on the role of private credit, the total levels of indebtedness of an economy have largely been ignored. This paper studies the impact of the total level of and increases in debt-to-GDP on economic growth for 26 developed countries in the short, medium and longer term. We analyse whether we can predict the future level of growth, simply by looking at the total level of debt, or increases in that debt level. We find that there is a negative correlation between high levels of debt and short term economic growth, but that this effect tapers in the medium and long term. Similarly, we find that rapid debt accumulation is negatively related to economic growth over the short term, the impact is less pronounced over the medium term and is non-existent over the long term.http://revistas.udc.es/index.php/ejge/article/view/4308Public DebtGovernment DebtPrivate DebtGrowthOECD Countries |
| spellingShingle | Willem Vanlaer Wim Marneffe Lode Vereeck Johan Vanovertveldt Does debt predict growth? An empirical analysis of the relationship between total debt and economic output European Journal of Government and Economics Public Debt Government Debt Private Debt Growth OECD Countries |
| title | Does debt predict growth? An empirical analysis of the relationship between total debt and economic output |
| title_full | Does debt predict growth? An empirical analysis of the relationship between total debt and economic output |
| title_fullStr | Does debt predict growth? An empirical analysis of the relationship between total debt and economic output |
| title_full_unstemmed | Does debt predict growth? An empirical analysis of the relationship between total debt and economic output |
| title_short | Does debt predict growth? An empirical analysis of the relationship between total debt and economic output |
| title_sort | does debt predict growth an empirical analysis of the relationship between total debt and economic output |
| topic | Public Debt Government Debt Private Debt Growth OECD Countries |
| url | http://revistas.udc.es/index.php/ejge/article/view/4308 |
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