The causality between long term public debt and economic growth
The debate on the causal link between long-term public debt and economic growth remains open to this day. Moreover, the recent global financial crisis has given a new meaning, creating a huge field of work, and there is currently no consensus among economists in this direction. The net effect of debt on economic growth cannot be established theoretically, necessitating the use of a thorough and consistent empirical analysis. Historically in advanced countries the increase of debt levels occurs in response to deteriorating economic conditions and hindering growth: reduced fiscal revenues, declining asset prices or huge military spending.
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