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The impact of public debt on economic growth in Albania

Author

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  • Etleva Bajrami

Abstract

Public debt provides the necessary funds for governments to enable economic incentives in various sectors or industries. Public debt enables strategic investments that benefit the entire economy, which would otherwise be difficult to achieve. By using public debt governments do not reduce government spending in case of insufficient revenues. Public debt has become commonplace in today governments. For this reason, public debt has been in the attention of policymakers as well as experts of economies in recent decades. The focus of this study is the level of public debt and its impact on economic growth in Albania. The purpose of this study is to find the relation between public debt and GDP per capita. The first objective is to analyze the relation of total public debt with GDP per capita and the second objective is to analyze the external debt relation with GDP per capita. To achieve the paper objectives, the analysis is based on a model build with secondary data using the least-squares method. In this paper, it has been concluded that total public debt has a positive impact on GDP growth per capita, while there is a negative relationship between external public debt and GDP per capita.

Suggested Citation

  • Etleva Bajrami, 2020. "The impact of public debt on economic growth in Albania," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 23(77), pages 20-27, September.
    • Handle: RePEc:rej:journl:v:23:y:2020:i:77:p:20-27
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    References listed on IDEAS

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    1. Checherita-Westphal, Cristina & Rother, Philipp, 2012. "The impact of high government debt on economic growth and its channels: An empirical investigation for the euro area," European Economic Review, Elsevier, vol. 56(7), pages 1392-1405.
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    More about this item

    Keywords

    public debt; external debt; GDP per capita; government consumption;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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