Public Debt and Economic Growth in Brazil

Afonso, António; Gadelha, Sérgio; Silva, Agatha

http://hdl.handle.net/10400.5/20636

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Authors

Afonso, António

Gadelha, Sérgio

Silva, Agatha

Abstract(s)

This paper provides new insights on the relationship between public debt and economic growth in Brazil. We used Granger causality tests, in multivariate and bivariate analyses using respectively VEC and ARDL methodologies, and monthly data over the period 1998:1-2019:11. We find that: i) debt-to-GDP and GDP growth rate have a bi-directional Granger causality relationship; ii) debt can improve growth in the short run and becomes harmful in the long run; iii) GDP growth always reduces debt, both in the short and long run; iv) the dynamic between debt and growth in the long run is influenced by the inflation rate, exchange rate and the Emerging Markets Bond Index Plus (Embi+).

Keywords

Granger causality Vector Autoregressive Autoregressive Distributed Lag government debt economic growth Brazil

URI

http://hdl.handle.net/10400.5/20636

Citation

Afonso, António, Sérgio Gadelha e Agatha Silva (2020). "Public Debt and Economic Growth in Brazil". Instituto Superior de Economia e Gestão – REM Working paper nº 0148 – 2020