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PUBLIC DEBT, ECONOMIC OPENNESS, AND SUSTAINABLE ECONOMIC GROWTH IN EUROPE: A DYNAMIC PANEL CAUSAL ANALYSIS

RUDRA P. PRADHAN|MAK B. ARVIN|MAHENDHIRAN NAIR|JOHN H. HALL
경제연구소 (Hanyang Economic Research Institute)|2022.03|Journal of Economic Development|제47권 제1호|pp. 167-183|DOI 10.35866/caujed.2022.47.1.007

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키워드

Economic GrowthPublic DebtEconomic OpennessEuropean Countries
주제분류경제학

초록

This paper examines the short-term and long-term dynamics between public sector debt, economic openness, and economic growth in European countries between 1990 and 2018. Using the panel vector error correction model, we find that both public debt and economic openness contribute to long-term economic growth in European countries. The empirical analysis also shows that there are strong endogenous links between public debt, economic openness and economic growth in Europe in the short run. These relationships suggest that governments in Europe should give careful attention to the co-curation of macroeconomic policies pertaining to public sector spending/taxation, economic openness, and economic growth.

Abstract

This paper examines the short-term and long-term dynamics between public sector debt, economic openness, and economic growth in European countries between 1990 and 2018. Using the panel vector error correction model, we find that both public debt and economic openness contribute to long-term economic growth in European countries. The empirical analysis also shows that there are strong endogenous links between public debt, economic openness and economic growth in Europe in the short run. These relationships suggest that governments in Europe should give careful attention to the co-curation of macroeconomic policies pertaining to public sector spending/taxation, economic openness, and economic growth.

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