The Effects of Public Debt on Economic Growth: A Cointegration Analysis for Turkey

Abstract

This paper examines the effects of public debt on economic growth in Turkey by using ARDL and NARDL approaches. We find that public total debt does not have a significant effect on economic growth in the long run while it has a negative impact in the short run. It seems that public external debt has a significant and positive (negative) effect on economic growth rate in the long (short) run. When we use public domestic debt, quadratic specification for public total debt, and NARDL model, we don't find a cointegration among relevant variables. Finally, we conlcude that investment and credits boost the economic growth.