scholarly journals Empirical Evidence on Factors Conditioning the Turning Point of the Public Debt–Growth Relationship

Economies ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 191
Author(s):  
Mindaugas Butkus ◽  
Diana Cibulskiene ◽  
Lina Garsviene ◽  
Janina Seputiene
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Private Consumption ◽  
Turning Point ◽  
Global Financial Crisis ◽  
Government Expenditure ◽  
The Public ◽  
Taxation Policy ◽  
High Expenditure ◽  
The Global Financial Crisis

This paper contributes to the limited literature on the factors conditioning the turning point of the public debt–growth relationship. A decade after the global financial crisis, when the debt ratio in many countries was still above pre-crisis levels, the COVID-19 pandemic again increased the pressure on public finances. It revived the debate on the ability to promote economic recovery through debt-financed government expenditure. However, more intense government borrowing increases its costs and uncertainty about future taxation policy, thus potentially disturbing private consumption, investment, and economic growth. In this paper, we estimate the thresholds of indicators on which the expenditure multiplier depends, which may already imply a risk that public debt will dampen economic growth. We use a methodology of structural threshold regression to examine the varying effects that debt might have on growth using consumption, investment, taxes, and imports as threshold variables, as well as several other factors suggested by previous contributions. The applied methodology allows for the addressing of parameter heterogeneity and endogeneity to be accounted for at the same time. The main results suggest that a positive debt effect is more likely if the conditions for a high expenditure multiplier are met, that an increase in the public-debt-to-GDP ratio is not necessarily deleterious to growth if shares of private consumption and investment in GDP are high, while the tax-revenue-to-GDP ratio is low.

Inequality amid Stagnation

2018 ◽  
Author(s):  
Andrea Brandolini ◽  
Romina Gambacorta ◽  
Alfonso Rosolia
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Economic Crisis ◽  
Turning Point ◽  
Global Financial Crisis ◽  
Real Income ◽  
Income Growth ◽  
Macroeconomic Performance ◽  
Major Turning Point ◽  
The Global Financial Crisis

This chapter describes how inequality and real incomes evolved in Italy from the 1980s through the double-dip recession it experienced after the Global Financial Crisis. It brings out how the crisis Italy experienced in the early 1990s marked a major turning point, with inequality increasing and economic growth subsequently low. The labour market and tax–transfer reforms implemented in the following years are also discussed. The severe impact of the economic Crisis and very limited recovery seen to date reinforce pre-existing cleavages across the generations and geographically. Substantially improved macroeconomic performance is seen as central to the restoration of significant real income growth for ordinary households.

scholarly journals Public Debt Threshold in the Republic of North Macedonia

2021 ◽  
Author(s):  
Sasho Kjosev ◽  
Martin Noveski ◽  
Nina Mojsova Kjoseva
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Turning Point ◽  
Generalized Method Of Moments ◽  
Annual Data ◽  
Reverse Causality ◽  
The Public ◽  
General Government ◽  
Non Linear ◽  
The Republic

Research question: Is there a non-linear relationship between public debt and economic growth in North Macedonia, in the form of an inverted U-shape? Motivation: Government consumption plays an important role in the stability of the national economy, especially in periods of economic crisis. However, a rapidly growing public debt is a concerning issue nowadays, since it might jeopardize economic growth perspectives. Economic theory suggests that public debt has non-linear impact on economic growth in the form of an inverted U-shape. In other words, it is believed that after a certain threshold, the public debt will have deleterious impact on economic growth. Idea: Given that such threshold varies significantly across countries, the aim of this paper is to calculate the turning point of the public debt impact in the Republic of North Macedonia. Tools: For this purpose, we use non-linear multiple regression model for the real GDP growth rate as a dependent variable, general government public debt-to-GDP ratio (in nominal and squared terms) as a key independent variable, as well as several other controlling variables. Since theory also suggests reverse causality between economic growth and public debt, we use two different estimation techniques (Ordinary Least Squares and Generalized Method of Moments) to deal with potential endogeneity, and to cross-validate the results. Data: In this regard, we use annual data for the period 1998 – 2019, for 14 variables in total, obtained from several different data sources. Findings: Our results show that general government debt in the Republic of North Macedonia positively affects economic growth until it reaches around 30% of GDP, whereas further indebtedness after that turning point will most likely have a negative impact. Contribution: Given that current debt level is far above the estimated turning point, the need of urgent fiscal consolidation inevitably arises. This is especially important in the light of the ongoing COVID-19 crisis, which imposed the need for strong government intervention and pointed out the importance of the fiscal space for such matter.

scholarly journals Do Bubble Behaviors Exist in Chinese Film Stocks?

SAGE Open ◽  
2020 ◽  
Vol 10 (4) ◽  
pp. 215824402098330
Author(s):  
Chi-Wei Su ◽  
Lu Liu ◽  
Kai-Hua Wang
Keyword(s):  
Economic Growth ◽  
Global Financial Crisis ◽  
Film Industry ◽  
Stock Index ◽  
Industrial Policies ◽  
Chinese Film ◽  
Augmented Dickey Fuller ◽  
Boom And Bust ◽  
Negative Impacts ◽  
The Global Financial Crisis

This article investigates bubbles in the Chinese film industry to reveal the industry’s boom and bust process that influences employment, citizen’s livelihoods, and even economic growth. We adopt the film stock index to reflect the industry’s trajectory and employ the generalized and backward sup augmented Dickey–Fuller tests to detect bubble periods. Empirical results indicate that there are three positive bubbles in 2007, 2013, and 2015, indicating that the film market continues to expand after temporary frustrations. Meanwhile, one negative bubble is found in 2019, which demonstrates that the bubble’s negative impacts persist and the film industry is still having problems such as declining industrial output. Economic growth, film quality, and industrial policies are common factors for all bubbles. The global financial crisis, capital in- and outflows, internet giants’ entry and sky-high remuneration are reasons for certain bubble behaviors. Hence, market practitioners should actively recognize bubbles and observe their evolution, which will favor industrial stabilization. A perfect legal system, moderate industrial policies, a competitive market environment, and other measures are needed to confront the opportunities and challenges.

scholarly journals Role of Governance in Debt-Growth Relationship: Evidence from Panel Data Estimations

2021 ◽  
Vol 13 (11) ◽  
pp. 5954
Author(s):  
Qamar Abbas ◽  
Li Junqing ◽  
Muhammad Ramzan ◽  
Sumbal Fatima
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Negative Impact ◽  
Positive Impact ◽  
Linear Pattern ◽  
The Public ◽  
Mediating Role ◽  
National Output ◽  
State Governance

This paper provides an empirical analysis of the relationship between debt and national output mediated by a measure of the quality of state governance. Using WGIs dataset of 106 countries for the period 1996–2015, the paper analyzes the mediated effect of governance on debt-growth relationship. For this purpose, we use the fixed effect (LSDV) and system GMM estimation technique in order to overcome the possible problem of endogeneity. Results show the non-linear pattern between public debt and economic growth via governance. Although, public debt has negative impact on economic growth, but the results are statistically positive and significant when public debt is interacted with governance, which confirms that governance is a channel by which public debt influences economic growth. Moreover, we calculate the threshold of governance which shows that the public debt has positive impact on economic growth when the governance level is higher than the threshold and adversely affects the economic growth in the case of low level of governance than threshold. Evidence from this study reveals the fact that governance plays a mediating role in debt-growth relationship as there is a pattern of complementarity between public debt and governance: the higher the level of governance, the lesser the adverse effect of public debt on economic growth.

scholarly journals The Impact Of Macroeconomic Factors In Economic Growth

2016 ◽  
Vol 12 (7) ◽  
pp. 331 ◽  
Author(s):  
Alush Kryeziu
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Public Debt ◽  
Budget Deficit ◽  
Econometric Model ◽  
Macroeconomic Factors ◽  
The Public ◽  
Time Period ◽  
Macroeconomic Indicators ◽  
The Impact

In this paper will be discussed the main concepts and trends of the macro-fiscal indicators in economic growth, as well as their importance in the economic development of different countries, with special emphasis in Kosovo. One of the aims of this paper is to define and explain the connection between macroeconomic indicators with specific emphasis: the public debt, budget deficit and inflation on economic growth. In order to analyze this impact of variables in economic growth, the targeted time period of research is the period from 2004 to 2014. While the data taken regarding Kosovo were obtained from the year 2005, due to the fact that earlier the data have been limited because of the developments in which Kosovo went through. The model that best represents the link between macro-fiscal indicators on economic growth is the linear regression as an econometric model. We will have the opportunity to see and interpret these data. The overall results have emerged in accordance with theoretical discussions presented, but this relationship has not turned out to be very strong because the coefficients acquired did not have great explanatory skills for economic phenomena.

Is There a Threshold Effect of Public Debt on Economic Growth?

2019 ◽  
pp. 49-64
Author(s):  
Seher Gulsah Topuz ◽  
Taner Sekmen
Keyword(s):  
Economic Growth ◽  
Linear Relationship ◽  
Public Debt ◽  
Threshold Effect ◽  
Oecd Countries ◽  
Fiscal Policies ◽  
The Public ◽  
Regression Methods ◽  
The Relationship ◽  
Panel Threshold Regression

In this chapter, the relationship between public debt and economic growth is examined for OECD countries. In order to determine this relationship, the data between 2002 and 2016 is analyzed using panel threshold regression methods. The findings of the study suggest that the relationship between public debt and economic growth is linear. The public debt threshold is estimated at 99.75% for OECD countries but it is statistically insignificant. While the public debt to GDP ratio is both below and above this threshold, the effect of public debt on economic growth is negative and statistically significant. There is no evidence of the existence of a non-linear relationship between public debt and economic growth. These findings are expected to guide policymakers in the implementation of fiscal policies.

Introduction

2019 ◽  
pp. 1-6
Author(s):  
S. Ali Abbas ◽  
Alex Pienkowski ◽  
Kenneth Rogoff
Keyword(s):  
Public Debt ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Second World War ◽  
Policy Debate ◽  
World War ◽  
Advanced Economies ◽  
The Global Financial Crisis ◽  
Second World ◽  
Public Policy Debate

Not since the aftermath of the Second World War has the topic of sovereign debt taken such importance in public policy debate. Reeling from the effects of the Global Financial Crisis, public debt-to-GDP ratios in advanced economies are at levels not seen in over half a century....

scholarly journals Regulating Private Higher Education in South Africa

2015 ◽  
Author(s):  
Chika Sehoole
Keyword(s):  
Higher Education ◽  
South Africa ◽  
Financial Crises ◽  
Global Financial Crisis ◽  
Private Higher Education ◽  
Private Companies ◽  
The Public ◽  
The Government ◽  
Laws And Policies ◽  
The Global Financial Crisis

This article makes case of how South Africa has been able to use its laws and policies to achieve its objectives of regulating private higher education. This happened in the context of an ascendancy of neo-liberal policies which favoured deregulation and the rolling back of the state. Through these policies the government was able to protect the public even during the global financial crisis as it had registered credible and financially sound institutions which could weather off the financial crises which affected many private companies worldwide.

scholarly journals Trend and Impact of Public Debt in Nepalese Economy

2015 ◽  
Vol 4 ◽  
pp. 85-89
Author(s):  
Yadab Raj Sharma
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
The Public ◽  
The Government

The public debt or public borrowing in Nepal is considered to be an important source of income of the government. Public debt helps to achieve targeted economic growth and to narrow down the gap between expenditure and revenue. However, the country is falling into debt trap in the form of interest and principal payment. In this article an attempt has been made to find out the situation, trend and impact of public debt on Nepalese economy.DOI: http://dx.doi.org/10.3126/av.v4i0.12363Academic Voices Vol.4 2014: 85-89

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