Causal relationship between Government debt and Economic growth:Evidence from the Quantile regression analysis

• Main Authors: Tung,Yan-Jyun, 董彥均
• Other Authors: Lee,Cheng-Feng
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/z5fu2t

碩士 === 國立高雄應用科技大學 === 企業管理系 === 104 === In recent years, many studies have discussed about whether high government debt could affect economic growth. Due to different statistical methods, countries, or periods of data, there has been no enough evidence to support that the causal relationship exists between government debt and economic growth.The reason may be that in the past, some approaches explore the causal relationship in the mean of the variables, rather than the causal relationship in views of quantiles in distribution.Perhaps ignoring the causal relationship in the quantiles other than the mean, the result of conventional approach may result in wrong inference. This study selects twelve OECD countries,applying the quantile causality test and Granger causality test to re-test whether there is a causal relationship between two variables.The results can be classified into four categories.First,the debt ratio to GDP is the cause of economic growth rate in the United States, Ireland and Japan.Second, theeconomic growth ratecan Grange cause the debt ratio to GDP inGreece, Luxembourg, Portugal, Finland, France and Spain.Third,the debt ratio to GDP and economic growth rate is in a two-way causal relationship for Italy and Austria.Fourth, the debt ratio to GDP has no causal relationship with economic growth rate in the United Kingdom.After confirming the causal relationship of the variables, this study usesthe quantile regression to check the directions and sizes of relationshipbetween these two variables.Our results show that all the quantiles of debt ratio to GDP(economic growth rates) have almost a negative effect on economic growth rates(debt ratio to GDP).In the degree of influence, the countries, which are government debt is that the causality of economic growth rate, are all significant effect in high quantile(quantile 0.75, 0.9).However, in the degree of influence, the countries, which are economic growth rate is that causality of government debt as well as the government debt and economic growth rate is in a two-way causal relationship, are different from otherkinds of countries.