Effects Of Public Debt On Economic Growth - 1875 Words

Most research has shown that the effects of public debt on economic growth differs across countries; depends on country-specific factors and institutions such as the level of fiscal imbalances, the level of debt sustainability, the level of financial deepening, macroeconomic stability, and political environment. In response to the financial and economic crisis of 2008/09, the accumulation of public debt and its effects on economic growth have received renewed attention among many economists and policy makers. Conventionally, a good measure of the sustainability and accumulation of a country’s debt is to consider the debt level to the overall economic output of the country measured by the Gross Domestic Product (known as the Debt-to-GDP ratio). Data released by the Bank of Ghana recently showed that Ghana’s debt stock rose to GH ¢ 97.2billion (or US$25.6billion) in December 2015, equivalent to 72.9% of GDP. Out of this, total external debt amounted to GH ¢57.8billion (43.4% of GDP) and domestic debt was GH ¢39.4billion (29.5% of GDP). Therefore, based on Ghana Statistical Service population projections as at the end of 2015, every Ghanaian citizen, including children owe about GH ¢3,512.81 in government debt compared to GH ¢872.99 as of 2011. As government runs budget deficits, mainly leading to the rise in the debt level; servicing the debt comes with severe consequences. Notwithstanding the methodology, assumptions, and approach, the growing bulk of research shows thatShow MoreRelatedThe Effects Of Public Debt On Economic Growth1893 Words   |  8 Pagesimplications of the growing government debt Most research has shown that the effects of public debt on economic growth differs across countries; depends on country-specific factors and institutions such as the level of fiscal imbalances, the level of debt sustainability, the level of financial deepening, macroeconomic stability, and political environment. In response to the financial and economic crisis in 2008/09, the accumulation of public debt and its effects on economic growth have received renewed attentionRead MoreThe Effects Of Public Debt On Economic Growth1638 Words   |  7 PagesGhana’s debt stock rose to GH ¢ 97.2billion (or US$25.6billion) in December 2015, equivalent to 72.9% of the year’s total economic output, measured by the Gross Domestic Product (GDP). Out of this, total external debt amounted to GH ¢57.8billion (43.4% of GDP) and domestic debt was GH ¢39.4billion (25.2% of GDP). That means, in nominal terms, based on population projections by the Ghana Statistical Service; for every man , woman, and child living in Ghana owe about GH ¢3,512.81 in government debt comparedRead MoreThe Issue Of Public Debt1453 Words   |  6 Pagesexception. As most countries experience significant development, there is one key issue which underlies this development but has mostly been ignored by empirical research: that is, the issue of public debt. Public debt has become relevant in the world economies because of its perceived contribution to economic development. The continuous improvement in most world economies requires investment in infrastructure, education, social welfare, health and other sectors of the economies. The huge expendituresRead MoreThe Impact Of Public Debt On The Economy798 Words   |  4 Pagessize of public debt raises significant concern to individuals, governments, investors and the whole body of international organizations as well as financial institutions at large. Especially after the financial crisis of 2008, the impact of public debt on the overall economic growth has being a subject for analysis although not much empirical work has been done. In April 2001, Ghana declared itself as heavily indebted poor country. This declaration was to enable Ghana qualify for the debt relieveRead MoreThe Social Benefits Of Economic Growth And Development1342 Words   |  6 PagesSocial Benefits of Economic Growth and Development In general, individuals in developed countries strive to improve their quality of life. All developed nations, as well as developing countries, are currently experiencing the negative impact of the global economic downturn. This has prompted all nations to make economic development a top priority (Bruyn 14). Economic development is defined as a state in which a society enjoys sustained economic growth. One effect of economic growth is an increase inRead MorePublic Debt And Political Changes Essay1517 Words   |  7 Pages6.3Domestic Public Debt and Political Changes Figure 8 shows that domestic public debt has been aggravated since January revolution, as domestic public debt was 755.3 billion Egyptian pounds in 2010; and then increased to 2116.3billion Egyptian pounds in 2015. This means that domestic public debt has increased by 180% during period of revolutions. In spite the trend of domestic public debt before revolutions was positive; however, the change in domestic public debt was in average 77.2 billionRead MoreHow Do Government Deficits And Debt Affect U.s. Economic Welfare?1023 Words   |  5 Pagesis â€Å"How do government deficits and debt affect U.S. economic welfare?† The research question addressed by this article is how do deficit and debt effect interest rates? The article begins by showing the complexity of measuring these elements do to the business cycle and its effects on the variables. The author proposes the best way to measure deficit and debts effect on interest rates is to take future values for interest rates and the projected amounts of debt and deficit. This allows for the variablesRead MoreAid, Policy And Growth1601 Words   |  7 Pages Larry L. Day Aid, Policy and Growth: The Case of St. Lucia Abstract This paper takes a look at aid, policy and growth literature using data from St. Lucia, a country that received $24,000,000 US dollars in 2014. Our findings suggest that aid, in the presence of sound economic policy, does not contribute to growth in St. Lucia. However, this study does find statistical evidence to suggest that democratic governance and openness and monetary policy does impact the effectivenessRead MoreA Model Of Sustained Economic Growth1720 Words   |  7 Pages The intention is to develop a model where sustained economic growth is the product of the alternation of numerous agents and this literature will provide insights to reasons for variations in Gdp growth during the recessionary period(2008-2013) in Europe while investigating the optimising agents which had significant impact on Gdp growth rate. The Solow growth(1956) hypothesis looked for the determinants of sustainable economic development in per capita gross domestic product. The modelRead MoreEig ht Centuries Of Financial Folly By Carmen M. Reinhart And Kenneth S. Rogoff1727 Words   |  7 Pagesinfluential economic analysis book around recent years.(paul letter2) In this essay, I will give a brief view of Reinhart-Rogoff’s theory and explore some criticisms of R-R’s work, and then summarizes their defences against those criticisms. The main argument of Reinhart-Rogoff is that too much debt will leads to a huge dangerous consequence. In their recent working paper â€Å"Growth in a Time of Debt†, they pointed out that once government issued debt which exceeds 90 percent of GDP, economic growth would