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Determinants of the Public Debt and the Role of the Natural Resources: A Cross-Country Analysis

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  • Elkhan Sadik-Zada, Andrea Gatto

    (Ruhr-Universität Bochum and Cambridge University)

  • Andrea Gatto

    (Department of Economic & Legal Studies (DISEG))

Abstract

This paper investigates the major drivers of the public debt growth in 184 countries. The underlying cross-country survey is conducted on the basis of the improved compilation of datasets on the central government debt for 2013. The study finds that oil abundance, economic growth rate, the share of mineral rent in the total revenue, interest rate payments for foreign borrowings, and being a developing country have statistically significant impact on the growth of the public debt. In contrast, defense spending, unemployment rate, and inflation rate do not have a statistically significant positive impact on the public debt rate.

Suggested Citation

  • Elkhan Sadik-Zada, Andrea Gatto & Andrea Gatto, 2019. "Determinants of the Public Debt and the Role of the Natural Resources: A Cross-Country Analysis," Working Papers 2019.04, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2019.04
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    Cited by:

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    2. Bayale, Nimonka & Tchagnao, Abdou-Fataou & Chavula, Hopestone Kayiska, 2020. "More elections, more burden? On the relationship between elections and public debt in Africa," MPRA Paper 101744, University Library of Munich, Germany.
    3. Wang, Wencheng & Ning, Zinan & Shu, Yang & Riti, Joshua Sunday & Riti, Miriam-Kamah J., 2023. "Natural resource rents and public debts nexus in African resource-rich and most indebted nations: Issues with aggregation bias," Resources Policy, Elsevier, vol. 82(C).
    4. Sadik-Zada, Elkhan Richard & Gatto, Andrea, 2021. "The puzzle of greenhouse gas footprints of oil abundance," Socio-Economic Planning Sciences, Elsevier, vol. 75(C).
    5. Mohd Shahidan Shaari & Faiz Masnan & Mohd Juraij Abd Rani & Zaharah Zainal Abidin & Abdul Rahim Ridzuan & Norreha Othman, 2023. "The Grim Cost of Economic Growth and Environmental Degradation: A Comprehensive Panel ARDL Study of Public Debt in the ASEAN-5 Countries," Sustainability, MDPI, vol. 15(14), pages 1-15, July.
    6. Yacouba COULIBALY & Alexandru MINEA & Patrick VILLIEU, 2022. "How Do Natural Resource – Backed Loans Affect the Public Debt Sustainability in Developing Countries? Empirical Evidence," LEO Working Papers / DR LEO 2937, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    7. Ampofo, Gideon Minua Kwaku & Jinhua, Cheng & Bosah, Philip Chukwunonso & Ayimadu, Edwin Twum & Senadzo, Patrick, 2021. "Nexus between total natural resource rents and public debt in resource-rich countries:A panel data analysis," Resources Policy, Elsevier, vol. 74(C).
    8. Achua, Joseph Kwaghkor & Yusuf, Mariam & Wakdok, Samuel Stephen, 2022. "Nonlinear public debt and resource rent nexus in highly indebted resource-rich sub-Saharan economies: Evidence from Nigeria," Resources Policy, Elsevier, vol. 79(C).
    9. Di Johnson & John Rodwell & Thomas Hendry, 2021. "Analyzing the Impacts of Financial Services Regulation to Make the Case That Buy-Now-Pay-Later Regulation Is Failing," Sustainability, MDPI, vol. 13(4), pages 1-20, February.
    10. Elkhan Richard Sadik-Zada, 2020. "Distributional Bargaining and the Speed of Structural Change in the Petroleum Exporting Labor Surplus Economies," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(1), pages 51-98, January.
    11. Agnieszka Kozera & Aldona Standar & Łukasz Satoła, 2020. "Managing Rural Areas in the Context of the Growing Debt of Polish Local Government Units," Agriculture, MDPI, vol. 10(9), pages 1-25, August.
    12. Okombi, Idrys Fransmel & Mampieme, Vaccili Belneche, 2024. "Cyclicality of public debt in developing countries: Does dependence on natural resources matter?," Resources Policy, Elsevier, vol. 96(C).
    13. Pratibha, S. & Sharma, Vishal & Krishna, M., 2024. "Nexus between total natural resource rents and public debt within symmetric and asymmetric framework: Fresh insight from resource-rich economy," Resources Policy, Elsevier, vol. 93(C).
    14. Mihaela Simionescu & Javier Cifuentes‐Faura, 2023. "Analysing public debt in the Mexican states: Spatial convergence, regional drivers and policy recommendations," Papers in Regional Science, Wiley Blackwell, vol. 102(4), pages 737-760, August.

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    More about this item

    Keywords

    Public debt; Oil rent; Mineral rent; Defence spending; Developing countries;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • F3 - International Economics - - International Finance

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