The Effect of Public Debt Accumulation on Economic Growth and Fiscal Sustainability in Developing Nations
Posted: Dec 01, 2020
Abstract
The relationship between public debt and economic growth represents one of the most enduring puzzles in development economics. Traditional economic theory posits that moderate levels of public debt can stimulate economic growth through productive public investments, while excessive debt accumulation may crowd out private investment and hinder long-term growth prospects. However, the empirical evidence regarding debt thresholds and their growth implications remains contentious and context-dependent. This research addresses this complexity through an innovative methodological approach that transcends conventional econometric techniques. Developing nations face unique challenges in managing public debt, including volatile revenue streams, limited access to international capital markets.
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