Analyzing the Threshold Impact of Public Debt on Economic Growth: an Investigation of the New Member States within the European Union

Burim Gashim & Gazmore Rexhepi

Central European Journal of Economic Modelling and Econometrics2024https://doi.org/10.24425/cejeme.2024.151363article
ABDC C
Weight
0.42

What the paper says

This paper aims to analyze the impact of public debt on economic growth in eleven EU new member states (NMS) from Central and South-Eastern Europe for the period 2000-2019. More specifically, we investigate if there is evidence of a non-linear (quadratic) relationship in this group of countries. Having in mind different economic and financial development, historical connections, and geographical proximity, we split them into three more homogenous groups: Balkan countries (BAL-4), Baltic countries (B-3), and Visegrad countries (VIS-4). The results of our study in all models indicate a statistically significant non-linear impact of public debt ratios on annual GDP per capita growth rates. The results across all models show a significant non-linear impact of public debt ratios on annual GDP per capita growth rates. Further, the calculated debt-to-GDP turning point, where the positive effect of accumulated public debt inverts into a negative effect, is roughly between 42.7%-58% of GDP, dependent on which sub-group we have analyzed. In general, the research may contribute to a better understanding of the problem of high public debt and its effect on economic activity in the new EU.

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https://doi.org/https://doi.org/10.24425/cejeme.2024.151363

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@article{burim2024,
  title        = {{Analyzing the Threshold Impact of Public Debt on Economic Growth: an Investigation of the New Member States within the European Union}},
  author       = {Burim Gashim & Gazmore Rexhepi},
  journal      = {Central European Journal of Economic Modelling and Econometrics},
  year         = {2024},
  doi          = {https://doi.org/https://doi.org/10.24425/cejeme.2024.151363},
}

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Evidence weight

0.42

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.30 × 0.4 = 0.12
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.