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Public Debt and Economic Growth: A Review of Contemporary Literature

Author

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  • Nikolaos Filippakis

    (Hellenic Mediterranean University, Heraklion, Crete, Greece)

  • Theodoros V. Stamatopoulos

    (University of West Attica, Athens, Greece)

Abstract

This article reviews the most important contributions to literature on "public debt - economic growth" relationship. Most relevant studies are empirical. Some of them are based on causality tests, albeit with no clear conclusion as to what the causes and what the effects are. We also indicate important gaps, which have not been considered and these are either periods of economic crises or "secular stagnation" phenomena. We suggest that policy makers and investors should reconsider not only the so-called 90% "threshold hypothesis" but also the causality itself, because there is no necessary theoretical consensus so far.

Suggested Citation

  • Nikolaos Filippakis & Theodoros V. Stamatopoulos, 2021. "Public Debt and Economic Growth: A Review of Contemporary Literature," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 19(1), pages 33-50.
    • Handle: RePEc:seb:journl:v:19:y:2021:i:1:p:33-50
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    References listed on IDEAS

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    29. Andrew Bell & Ron Johnston & Kelvyn Jones, 2015. "Stylised fact or situated messiness? The diverse effects of increasing debt on national economic growth," Journal of Economic Geography, Oxford University Press, vol. 15(2), pages 449-472.
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    2. Sardoni, Claudio, 2024. "Public spending and growth: A simple model," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 56-62.

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    More about this item

    Keywords

    Public debt; economic growth; financial crises; causality; threshold hypothesis; secular stagnation;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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