Intern. Journal of Profess. Bus. Review. |Miami, v. 8 | n. 4| p. 01-11 | e01772 | 2023.
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THE INFLUENCE OF PUBLIC DEBT ON ECONOMIC GROWTH: A REVIEW OF
LITERATURE
Ismail Yamin
A
, Omar Al_Kasasbeh
B
, Amro Alzghoul
C
, Ghaith Alsheikh
D
ARTICLE INFO
ABSTRACT
Purpose:
This paper conducts a thorough examination of the theoretical and empirical
literature on the influence of public debt on economic growth in both developed and
developing economies. The drive of this research is to
determine whether there is
mutual agreement on the effects of public debt on economic growth in global
economies.
Design/methodology/approach:
A literature
review approach is adopted, and the
current implications and future directions are explored
based on theoretical and
empirical analyses.
Findings:
The investigation uncovers a range of contradictory information on the
relative influence of public debt on economic growth. Although most of the literature
reviewed supports the negative impact of
public debt on economic growth, several
other studies have found a long-run affirmative influence of public debt
on economic
growth via the fiscal multiplier effect. The article also uncovered that a few more
research back up the Ricardian Equivalence Hypothesis (REH),
which claims that
there is no relationship between public debt and economic growth. Overall, it indicates
that theoretical models and empirical studies produce indecisive outcomes based on a
variety of criteria such as the level of development of the sampled nations, the
methodology utilized, data coverage, and the researchers' choice of control
variables,
among others.
