Séminaire GREDEG - Patrizio MORGANTI (Tuscia University- Viterbo, Italy)

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Private and public debt: some implications on economic growth

19-09-2019 - 14h00 à 15h30 - Room Picasso - GREDEG

Patrizio MORGANTI (Tuscia University- Viterbo, Italy) 

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Title: Private and public debt: some implications on economic growth

Abstract: Global debt has dramatically risen since the outbreak of the recent financial crisis, and now it represents an important concern for the world economy: in 2016 it was worth US$164 trillion, equivalent to 225% of global GDP. Indebtedness may hinder the economic growth of Advanced Economies (AEs) with an high debt burden, but it may also foster the development of Emerging Market Economies (EMEs). The purpose of this paper is to empirically investigate the medium-term relationships between private and public debt on the one hand, and real GDP per capita growth and its volatility on the other hand, during the 1980-2017 period for a sample of 117 countries.

For AEs, it emerges that private, mostly non-financial corporate, and public debt are negatively linked to economic growth, while positively to growth volatility, implying that rising debt may represent a serious threat to macroeconomic, financial, and fiscal stability of such countries. We also find that private, mostly household, debt is positively linked to economic growth and to growth volatility for EMEs, implying that indebtedness at early stages of development may promote real GDP growth.

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