sI�C���f0��w 0r���S�>����ʬ��;;YUY�ά����Ӈ���i��=q:���n6�����{����������n}��������^�\����NW���n0��F�U�/����.�7O�����'߽{����j�TU�ŻۧOԢ���E�TM�x���'�?���Y����b�~�q��z��������U�������9a�v�^i���(��3�A��l��C��g��5��!�?���J �a}�����-��%|��O8MOc��Z�m��ǧO^�sT Especially after the financial crisis of 2008, the impact of public debt on the overall economic growth has being a subject for analysis although not … The following tabl… 798 Words4 Pages. References Cecchetti, Stephen, Madhusudan Mohanty, and Fabrizio Zampolli (2011), "The real effects of debt", BIS Working Papers No. <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 595.44 841.68] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> context of the EAC region. <> Instability might be a result of nonlinear effects changing over time, across countries and economic conditions. These actions have brought into sharp focus the scale of the crisis in Ghana’s financial and economic wellbeing (Nyarko, 2014). Another finding of the research was that public debt indirectly effects growth via public investment. %PDF-1.5 The financial sector greatly improved, and Equity Bank Kenya became one of the largest banks in East Africa. Using simple descriptive statistics, they demonstrated forcefully that economic endobj Beyond this level, any increase of public debt has a negative effect on economic growth. This was robust to alternative model specifications. The magnitude of the negative permanent effect of debt was found to be larger than the positive transitory effect. The government then initiated investments in infrastructure. In particular, a persistent high level of public debt can consequently trigger detrimental effects on capital accumulation and productivity, which potentially has a negative impact on economic growth (Kumar and Woo, 2010). 1 0 obj <> <> <>>> The Impact Of Public Debt On The Economy. iii. %PDF-1.5 To analyze the relationship public debt and the economic growth of Nigeria. Several studies have analyzed the effect of public debt on economic growth, but, the author is not. H0 2 external debt does not significantly affect the economic growth of Nigeria. �܇�K��˽L!�o������#|�嬩�b��mM��0��/�2�!v��B��/S$7���. 4 0 obj However, the main focus of this study is an overview of the effects of external debt on the growth of Nigerian economy on measured by the gross domestic product. Economic growth improved from 2% in 2003 to 7% in 2007. 4 0 obj There are several channels through which high debt could adversely impact medium- and long-run growth which have received attention in the literature: high public debt can adversely affect capital accumulation and growth via higher long-term interest rates (Gale <>>> aware of studies that have analyzed the effects of external debt on economic growth in the. Directly public debt has no effect on investment but debt servicing has an inverse relation with public investment. The survey finds diverse and, in some cases, inconsistent evidence on the relative impact of public debt on economic growth. While high levels of public debt are likely to be deleterious for growth, this negative effect is non-linear and is observed only above a certain level of debt. endobj ��N�|1��=�� mzJ{��'G��M��+���#��y¯w���@X�M�s�������́�o�����=�~r]��Z��R)�B��%�Š+��+�3��m��T�>D��[$�����~��Q�}&l>��.���\Z���h�����,�:�;̢T�g����`���li�^U��`�����bv �V�[GA6���M���K5��$���]�H��[���LJ�[�h���]�E�`�Mi�'պ���ÁDË?����b��7l ��4q��ʈ��q�M2q�"���M}�@���W=����I>OQ��gJ����@j�Y�J�!����#n����ؽ�0����ZH@'���ܪ����1S���?p�.h���;K9�����"!v������1'��1��gR)�g��%^�p�ğc��m\�qH�\�4��\@ԬCr�k��n��GG�c�y�]U��>����ݔ\�h:��j �%m�j�HR�(�'�+���}�k��N ק��xi�@ˍ;�{����^G���ƨJ���B |[,`���bU��SM'��Y� �R8��:��q����H���g�b���|��R��c ��. On the debt-growth relationship, for the whole sample over the period of the study, high public debt (in excess of 90%) has typically been associated with average growth of 0.2% vs 2.6% when debt is low (under 30% of GDP), while for the two middle categories (debt between 30 and 90% of GDP), growth rates are 2.1% and 1.5%, respectively. Nonlinear effects might be more complex and difficult to model than previously thought. Our conclusion is that, at low levels, debt is good. %���� It is against this background that Reinhart and Rogoff (2010) pointed out the existence of strong negative effects of high public debt on economic growth. There are both positive and negative possible effects of public debt on the economy. 3 0 obj 3 0 obj increase in many countries’ public debt-to-GDP ratio. endobj t1��:N��0O�����]+��o�sJ�u5�D���Y�n�����6����?��J��|Z`���fڤ�4�1��|�vut�ą��(�R���߷oW�-b�m_�Vb��%�f���}Vm��ٴEо�V¶%��T���E6��R�f��|n[� ~At^s��u*�h.�|4�D��N�R��(9 <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 595.32 841.92] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> 1 0 obj 2 0 obj This study recommends to future scholars to research on qualitative variables of Economic Growth such as: corruption, political instability and x���MO�0�������۱���&-�6a������i��ǝ1m���5BM��y��f�[5��������M���BY����Z�4\��g�a� Regardless of the threshold, however, we find significant negative long-run effects of public debt build-up on output growth. The results indicated that Public Debt, Unemployment rate and Inflation rate were negatively related to Economic Growth, but not significant as indicators of Economic Growth. By 2005, the Kenyan public debt had reduced from highs of 80% of GDP in 2002 to 27% of GDP in 2005. Thus an economy grows much faster without public debt than with debt. The study investigates the effect of public debt on economic growth in Kenya, between 1980-2013.The choices of period was guided by data availability and escalation of Kenya’s public debt. In the first years of transition, in an extreme absence of the domestic production, public debt was used to finance current public administration spending. While the economic growth rate is likely to have a linear negative impact on the public debt-to-GDP ratio (a decline in the economic growth rate is, ceteris paribus, associated with an increase in the public debt-to-GDP ratio), high levels of public debt are likely to be detrimental for growth. There are a lot of empirical studies which focus on developing countries and look at the relationship between … 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. In order to analyze the economic impact of public debt on economic growth, we have considered data from 2005-2016. Fiscal policy holds crucial implications for economic growth in both the short and long run. Further research is certainly needed to fully understand the link between public debt and growth. The Effects Of Public Debt On Economic Growth 1893 Words | 8 Pages. 2 0 obj How the Large U.S. Debt Affects the Economy . Our results indicate that an increase in government debt is negatively associated with economic growth in both the short and long-run. \���=�3o���g��^g�ѯ^�c�n�y��c���fϚl�uC��u9@�Y�RZ���n��ϑ��v��]4-d?a���jt�\=9���ƃ����+{��̲�V�¹���ޭ �l���e�l���ܡKBq�R�j Furthermore, Pattilo et al (2002) assert that at low levels, debt has positive effects on growth but above the threshold point accumulated debt begins to have a negative impact on growth. survey on public debt).2 This paper focuses on the long-run effects of public debt. It will indicate that the relationship between the ratio of public debt to GDP and economic growth appears graphically as an inverted U shape. government debt External debt can be described as the situation where governments face budget deficit due to the hig… Beyond this threshold, a one percentage point increase of the public debt-to-GDP reduces economic growth by 0.08 percent. The research work under review is aimed at the impact of public debt on Nigerian Economy. The findings of the study reveal that in the full OECD model public debt exerts a significant negative permanent and positive transitory effect on economic growth. In the short run, the economy and voters benefit from deficit spending because it drives economic growth and stability. Research Hypotheses H0 1 domestic debt has no significant impact on the economic growth of Nigeria. The main problem is that, Kenya government has been relying heavily on public debt, aid and grants as a source of finance. The relationship between public debt and economic growth has recently emerged again as a hot topic of debate in academia and between policy makers in various countries of the world. x��=˒�qwF�pY�X6��� ��7&"����HD6v���4U�BJ7U������?�o��G�;�`������p��Ն�O[m ��d���W�i��*!y� }Eq-+-?k�Evڡj��F�3��(�?��Ϩ;��j�a�ο�eDZISO*2]��q[�̐�YX�5���f�����f��d�^O��F��m��l/�D��?�\�������c�����P�SN4G��/��|�B3�/_�dL*ȴW��u_��LXk�Âm��y�Z��� ��٠=@�y�F���m��0v��ͤ�5z>,k5�0�I�PZ~d��� j����J�i�Ə��U�}5ʠ^����ɞ�5����[T��^�y��sEisEQ��0�5�%��G�{�����z�-7�ƀ%閷����+�z���q��ë��8 >]�4l0̷È���F;u-�OW�˧��X���iһ8�V�}{���O��:NMsR,y����;�BG��hJ�1���O��!��Hn�A�0�������-Î�r�˥u�U=̇z8��^|DI���3�D�=�;�4t@�L��#�L?�׾�u�2-V9��X� O�-��0%�c!~B$�I�k[�����#���~8�D����Ө���i�Gv� 7%g7f���V��z�hu_ �:�?푢����/��(�D�;���3B�KI��#�xm����o��VSt*ш YX��х�������� ��8KT+�����ƒ endobj ��Ӎ�r�p��xD����Ϗ��O����vQҡ�wKẘ�,��D��Bl�7�Q�h|�LJ�me�d�5��6���7�B���`S���>�u=���xMO@�ߔ�� ����5��(VS variables. 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