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389693

Exploring the Non-Linear Impact of Government Debt and institutional quality on Economic Growth across the MENA Region: Evidence from GMM approach.

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Last updated: 20 Jan 2025

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Abstract

This paper investigates the relationship between government debt and economic growth in MENA countries, analyzing data from 19 countries over the period 1996-2022. A conventional growth model was developed and then estimated in quadratic form using the dynamic panel generalized method of moments (GMM). The findings indicate that while government debt generally affects economic growth, the relationship varies by specification. Linear models show a positive impact of debt on growth, whereas quadratic models reveal a non-linear association: debt positively influences growth up to a threshold of 12-15%, beyond which it becomes detrimental. Robustness checks incorporating population growth and unemployment rates support these findings. Policy recommendations include reducing government debt to enhance economic growth and mitigate sustainability and solvency risks. Emphasis is placed on fostering sustainable economic growth, promoting private sector projects with international market focus, and strengthening legal and institutional frameworks to optimize the use of borrowed funds

DOI

10.21608/caf.2024.389693

Keywords

government debt, Institutional Quality, Threshold effect, Economic growth, GMM

Authors

First Name

Ahmed Fathi

Last Name

Elkhadrawi

MiddleName

-

Affiliation

Assistant Professor, Economic Department, Faculty of Commerce, Damietta University

Email

afkhadrawi@gmail.com

City

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Orcid

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Volume

44

Article Issue

4

Related Issue

53112

Issue Date

2024-12-01

Receive Date

2024-10-30

Publish Date

2025-01-01

Page Start

135

Page End

161

Print ISSN

1110-4716

Online ISSN

2682-4825

Link

https://caf.journals.ekb.eg/article_389693.html

Detail API

http://journals.ekb.eg?_action=service&article_code=389693

Order

389,693

Publication Type

Journal

Publication Title

التجارة والتمويل

Publication Link

https://caf.journals.ekb.eg/

MainTitle

Exploring the Non-Linear Impact of Government Debt and institutional quality on Economic Growth across the MENA Region: Evidence from GMM approach.

Details

Type

Article

Created At

20 Jan 2025