Journal
ACTA OECONOMICA
Volume 68, Issue 2, Pages 209-229Publisher
AKADEMIAI KIADO ZRT
DOI: 10.1556/032.2018.68.2.2
Keywords
public debt; economic growth; bounds testing; euro area; peripheral euro area countries; central euro area countries
Categories
Funding
- Instituto de Estudios Fiscales [IEF 101/2014, IEF 015/2017]
- Banco de Espana [PR71/15-20229]
- Spanish Ministry of Education, Culture and Sport [PRX16/00261]
- Spanish Ministry of Economy and Competitiveness [ECO2016-76203-C2-2-P]
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This paper empirically investigates the short and the long run impact of public debt on economic growth. We use annual data from both the central and the peripheral countries of the euro area (EA) for the 1961-2013 period and estimate a production function augmented with a debt stock term by applying the Autoregressive Distributed Lag (ARDL) bounds testing approach. Our results suggest different patterns across the EA countries and tend to support the view that public debt always has a negative impact on the long-run performance of EA member states, whilst its short-run effect may be positive depending on the country.
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