Sep 21, 2016

Articles in journals

Ferreira, C.

22

18

This paper contributes to the empirical investigation of the causality relations between the real GDP growth and the growth of three debt categories, namely public, foreign and private debt, in the universe of the 28 European Union countries during the past decade. Using panel Granger causality estimations, we find non-statistically significant causality between foreign debt and economic growth and limited importance of the causality between private debt and real GDP growth. On the contrary, the results obtained show statistically relevant bidirectional causality relations between public debt and economic growth for the periods both before and after the outbreak of the recent financial crisis. Moreover, there is clear evidence of economic growth’s contribution to the decrease in public debt.

panel Granger causality,European Union,GDP growth,public debt,foreign debt,private debt