2001 | OriginalPaper | Buchkapitel
Debt, growth and inflation in large European economies: a vector auto-regression analysis
verfasst von : Majid Taghavi
Erschienen in: Capitalism and Democracy in the 21st Century
Verlag: Physica-Verlag HD
Enthalten in: Professional Book Archive
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This paper attempts to empirically test the hypothesis that whether debt matters in the EU. This has been performed by examining the potential adverse effects of debt in large European economies on investment, inflation and growth. Using the hybrid cointegration and vector autoregressive models, the findings, based on the period 1970–97, suggest that debt causes significant adverse effects on investment, but its impact on growth is not clear-cut. Moreover, debt appears to be inflationary in most cases in the long run, though produces no clear short run pattern on inflation.