Economic Growth and Public Indebtedness in the Last Four Decades: Is Portugal different from the other PIIGS’ economies?

Open access

Abstract

Portugal is a member of the group known by investors as ‘PIIGS’, countries characterised by having high public debt and weak economic growth. Using an extended time horizon, 1974–2014, this study seeks to empirically explore the relationship between economic growth and public debt in the PIIGS economies, particularly in the case of Portugal. Based on the estimation of linear regression models, it was concluded that in the last four decades there has been a negative relationship between economic growth and public debt in both cases, which is consistent with the literature. The negative relationship was even more pronounced in the case of the PIIGS than it was in the case of Portugal.

1. AMECO. (2015). European Commission, Annual macro-economic database. Retrieved from http://ec.europa.eu/economy_finance/ameco/user/serie/SelectSerie.cfm.

2. Baffes, J. (1996). Explaining stationary variables with non-stationary regressors. Applied Economics Letters, 4(1), 69-75. http://dx.doi.org/10.1080/758521836

3. Baum, C. (2000). Tests for stationarity of time series. Stata Technical Bulletin, 57, 36-39.

4. Checherita, C., & Rother, P. (2012). The impact of high and growing government debt on economic growth: an empirical investigation for the euro area. European Economic Review, 56(7), 1392–1405. http://dx.doi.org/10.1016/j.euroecorev.2012.06.007

5. Dickey, D., & Fuller, W. (1979). Distribution of the estimators for time series regression with a unit root. Journal of the American Statistical Association, 74(366), 427–431. http://dx.doi.org/10.1080/01621459.1979.10482531

6. Elliot, G., Rothenberg, T., & Stock, J. (1996). Efficient tests for an autoregressive unit root. Econometrica, 64(4), 813–836. http://dx.doi.org/10.2307/2171846

7. European Commission. (2013). Financial assistance in EU member states. Retrieved from http://ec.europa.eu/economy_finance/assistance_eu_ms/index_en.htm

8. GRETL. (2014). Gnu regression, econometrics and time-series library. Retrieved from http://gretl.sourceforge.net/

9. IMF. (2013a). Fiscal monitor April 2013 – Fiscal adjustment in an uncertain world, world economic and financial surveys. Washington: Author.

10. IMF. (2013b). Dealing with high debt in an era of low growth. IMF staff discussion note. Retrieved from https://www.imf.org/external/pubs/ft/sdn/2013/sdn1307.pdf

11. Krouse, S. (2012). Investing in ‘PIIGS’: Portugal. Retrieved from http://www.efinancialnews.com/story/2012-03-19/investing-in-’PIIGS’portugal?ea9c8a2de0ee111045601ab04d673622

12. Reinhart, C., & Rogoff, K. (2010). Growth in a time of debt. American Economic Review, 100(2), 573–578. http://dx.doi.org/10.1257/aer.100.2.573

13. Roubini, N., & Mihm, S. (2011). Can Europe be saved? Retrieved from http://www.slate.com/articles/business/project_syndicate/2011/05/can_europe_be_saved.html

Naše gospodarstvo/Our economy

Journal of contemporary issues in economics and business

Journal Information

Cited By

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 132 132 20
PDF Downloads 53 53 13