The Impact of Public Debt in Economic Growth

Authors

  • Ariana Xhemajli Selimaj Haxhi Zeka University, Kosova
  • Bedri Statovci Haxhi Zeka University, Kosova
  • Alma Shehu Lokaj Haxhi Zeka University, Kosova
  • Ermira Beqiri Haxhi Zeka University, Kosova

DOI:

https://doi.org/10.36941/ajis-2020-0072

Abstract

Different countries around the world, in addition to collecting public revenues as sources to cover public expenditures, also need other sources of funding, because frequently, most countries cannot generate sufficient budgetary revenue to afford all the budget expenditures. This is one of the reasons why public debt is created. There is always debate among economists as to what the optimal percentage of public debt should be so as not to impede the economic development of a country. To avoid impediments to economic development, then public debt management needs to be done properly so that it is earmarked for adequate projects that will contribute to economic growth and development. In this paper, we will analyse the impact of public debt on economic growth. Kosovo serves as our case study for the period 2009-2016, where remittances, exports, increase of average payments and subsidies were considered as other influencing factors. The prudent use of public debt, such as in various investments, job creation, and productivity growth, can all contribute to economic growth and financial stability. Otherwise, misuse of public debt will inadvertently affect the country’s destabilization, create an inflationary situation, and will only continue to increase liabilities to lenders – essentially, it will have no positive impact on the country. Reckless use of public debt will have a direct effect on lowering the economic growth rate.

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Published

2020-07-10

How to Cite

Selimaj, A. X. ., Statovci, B. ., Lokaj, A. S. ., & Beqiri, E. . (2020). The Impact of Public Debt in Economic Growth. Academic Journal of Interdisciplinary Studies, 9(4), 177. https://doi.org/10.36941/ajis-2020-0072

Issue

Section

Research Articles