Abstract
Most results from numerous studies show that the public debt rate has a negative effect on economic growth (Misztal, 2021; Panizza & Presbitero, 2014; Afonso & Alves, 2015; Reinhart & Rogoff, 2010a). Therefore, the aim of this paper is to empirically analyze the relationship between the public debt and economic growth for 16 upper-middle-income European countries for the period from 2000 to 2020. Our sample consists of three subgroups: the countries of the Western Balkans, upper-middle-income countries states members of the European Union (EU), and other developing European countries. The study employs panel regression models such as ordinary least squares (OLS), fixed-effects, and random-effects models, in order to test the relationship of the public debt-to-gross domestic product (GDP). Almost all models indicate that the relationship between debt-to-GDP is weakly negatively correlated with economic growth, where a 1% increase in debt-to-GDP decreases economic growth by 0.034%, even the average debt-to-GDP of our sample is 35.02%. Moreover, the findings of this study contribute to the literature regarding the public debt ratio and economic growth in developing countries.
Subject
Earth and Planetary Sciences (miscellaneous),Management Science and Operations Research,Decision Sciences (miscellaneous),Strategy and Management
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