The Impact of Public Debt on Economic Growth

Abstract

Following the 2007–2008 global financial crisis (GFC) and subsequent sovereign debt crisis in Europe, there has been a renewed interest in exploring the relationship between government debt and economic growth. One of the cornerstone studies on the subject that triggered an emergence of new literature was Carmen Reinhart and Kenneth Rogoff’s “Growth in a Time of Debt” (2010), which became widely cited and influential among commentators, academics, and policymakers in the debate surrounding austerity and fiscal policy in debt-burdened economies. Much of the research that followed the GFC uses panel data analysis of the debt-growth nexus using datasets from the World Bank, International Monetary Fund (IMF), European Commission, and Organisation for Economic Co-operation and Development (OECD).