THE EFFECT OF PUBLIC DEBT AND OTHER DETERMINANTS ON THE ECONOMIC GROWTH OF SELECTED EUROPEAN COUNTRIES

Abstract

Public debt has diverse effects on GDP varying from country to country and resulting from a number of different factors. This project is dedicated to research the effects of various macroeconomic indicators on GDP, with an emphasis on debt related predictors, using a multiple linear regression model. Findings of this research confirm the hypothesis that country determinants influence the efficiency of public borrowing and its effect on GDP. Surprisingly, no relation between debt crisis, level of government debt and its effect on GDP could be found. On the contrary, private borrowing showed a positive effect on the economy in every country where it resulted statistically significant. Interesting results were achieved concerning the openness of the economy and foreign direct investment. They were unequal, whereas initially supposed to be mostly positive.

DOI: http://dx.doi.org/10.5755/j01.em.17.3.2108