No individual wants to be in debt but in the case where a person’s expenses exceeds his/her income, then there is a high propensity to borrow. When the topic of public debt is mentioned, it is of much concern to a nation because it has a... more
No individual wants to be in debt but in the case where a person’s expenses exceeds his/her income,
then there is a high propensity to borrow. When the topic of public debt is mentioned, it is of much
concern to a nation because it has a lot to do with taxpayers and can have a lasting effect on future
generations and future of economic expectations. The financial crisis of 20071 had plunged many great
economies in the world into economic recession with many suggesting that writing-down subprime
debts would have been the best approach to resolve the crisis although difficult to do, however,
countries and regions that are very successful ay emerging from financial crises have debt write-downs.
The conventional view is that having higher public debt-to-GDP can stimulate aggregate demand and
output in the short run but crowds out private capital spending and reduces output in the long run.2
According to a historical analysis of Reinhart and Rogoff (2009, 2010)3
for 44 countries, for the past 200
years, the relationship between public debt and real GDP growth is characterized by strong
nonlinearities.
This paper is based on the impact of public debt on economic growth, and whether a debt ratio is harmful for growth of a country
then there is a high propensity to borrow. When the topic of public debt is mentioned, it is of much
concern to a nation because it has a lot to do with taxpayers and can have a lasting effect on future
generations and future of economic expectations. The financial crisis of 20071 had plunged many great
economies in the world into economic recession with many suggesting that writing-down subprime
debts would have been the best approach to resolve the crisis although difficult to do, however,
countries and regions that are very successful ay emerging from financial crises have debt write-downs.
The conventional view is that having higher public debt-to-GDP can stimulate aggregate demand and
output in the short run but crowds out private capital spending and reduces output in the long run.2
According to a historical analysis of Reinhart and Rogoff (2009, 2010)3
for 44 countries, for the past 200
years, the relationship between public debt and real GDP growth is characterized by strong
nonlinearities.
This paper is based on the impact of public debt on economic growth, and whether a debt ratio is harmful for growth of a country
