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Debt and Economic Growth in the European Union: A Panel Granger Causality Approach

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  • Cândida Ferreira

    (Universidade de Lisboa
    UECE – Research Unit on Complexity and Economics)

Abstract

This paper contributes to empirical investigation of the causality relationships between real gross domestic product (GDP) growth and the growth of three debt categories, namely public, foreign and private debt, in the universe of the 28 European Union (EU) countries during the past decade. Using panel Granger causality estimations, we find statistically relevant bidirectional causality relationships between public debt and economic growth for the periods both before and after the outbreak of the recent financial crisis. Moreover, there is clear evidence of economic growth’s contribution to decreasing public debt.

Suggested Citation

  • Cândida Ferreira, 2016. "Debt and Economic Growth in the European Union: A Panel Granger Causality Approach," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 22(2), pages 131-149, May.
    • Handle: RePEc:kap:iaecre:v:22:y:2016:i:2:d:10.1007_s11294-016-9575-y
    DOI: 10.1007/s11294-016-9575-y
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    Cited by:

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    2. Milena Konatar & Jovan Đurašković & Julija Cerović Smolović & Milivoje Radović, 2022. "Does Public Debt Affect Economic Growth? Panel Evidence from Central and Eastern Europe," Politická ekonomie, Prague University of Economics and Business, vol. 2022(5), pages 574-596.
    3. Oguzhan Bozatli & Seref Can Serin & Murat Demir, 2024. "The causal relationship between public debt and economic growth in G7 countries: new evidence from time and frequency domain approaches," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-27, June.
    4. Panagiotis Pegkas & Christos Staikouras & Constantinos Tsamadias, 2020. "On the determinants of economic growth: Empirical evidence from the Eurozone countries," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 23(2), pages 210-229, June.
    5. İbrahim Özmen & Mihai Mutascu, 2024. "Public Debt and Growth: New Insights," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8706-8736, June.
    6. Kummer-Noormamode, Sabina, 2018. "The Relationship between Public Debt and Economic Growth: Nonlinearity and Country-Specificity," MPRA Paper 98075, University Library of Munich, Germany.
    7. Rafael Doménech & José Manuel González Páramo, 2017. "Budgetary stability and structural reforms in Spain," Working Papers 17/11, BBVA Bank, Economic Research Department.

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