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The Influence Of Interest Rates On Economic Growth

Author

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  • Miloš Paunović

Abstract

Today, the total world debt is several times higher than the total world production. Interest, which is an integral part of debt, is therefore a variable that can significantly affect economic and overall social developments. The subject of the analysis of this paper is to consider the impact that interest rates have on economic growth. The conducted analysis based on secondarily available data showed that interest rates (observed in absolute amounts) negatively affect economic growth, ie that the accumulation of debt and interest affects the reduction of economic growth rates. Also, the analysis showed that the reduction of interest rates did not result in higher rates of economic growth, which is contrary to the assumptions of many theoretical concepts.

Suggested Citation

  • Miloš Paunović, 2022. "The Influence Of Interest Rates On Economic Growth," Ekonomske ideje i praksa, Faculty of Economics and Business, University of Belgrade, issue 47, pages 69-80, December.
    • Handle: RePEc:beo:ekidpr:y:2022:i:47:p:69-80
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    File URL: https://www.ekof.bg.ac.rs/journals/eip/47/05.pdf
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    More about this item

    Keywords

    interest rate; real output; public debt;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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