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Please use this identifier to cite or link to this item: http://hdl.handle.net/1942/21217

Title: Does debt predict growth? An empirical analysis of the relationship between total debt and economic output
Authors: Vanlaer, Willem
Marneffe, Wim
Vereeck, Lode
Van Overtveldt, Johan
Issue Date: 2015
Citation: European journal of government and economics, 4(2), p. 79-103
Abstract: Although the recent global financial crisis has stimulated a vast amount of research on the impact of public debt on economic growth and also increasingly on the role of private credit, the total levels of indebtedness of an economy have largely been ignored. This paper studies the impact of the total level of and increases in debt-to-GDP on economic growth for 26 developed countries in the short, medium and longer term. We analyse whether we can predict the future level of growth, simply by looking at the total level of debt, or increases in that debt level. We find that there is a negative correlation between high levels of debt and short term economic growth, but that this effect tapers off in the medium and long term. Similarly, we find that rapid debt accumulation is negatively related to economic growth over the short term, the impact is less pronounced over the medium term and is non-existent over the long term.
Notes: Corresponding author: Willem Vanlaer. Willem Vanlaer is researcher at Hasselt University, BE. Contact: Hasselt University, Faculty of Applied Economics, Martelarenlaan 42, BE-3500 Hasselt, Belgium. Email: willem.vanlaer@uhasselt.be, Telephone: 0032 11 26 87 59
URI: http://hdl.handle.net/1942/21217
ISSN: 2254-7088
Category: A1
Type: Journal Contribution
Validation: vabb, 2018
Appears in Collections: Research publications

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