Exploring the Non-Linear Impact of Government Debt and institutional quality on Economic Growth across the MENA Region: Evidence from GMM approach. | ||||
| التجارة والتمويل | ||||
| Volume 44, Issue 4, December 2024, Page 135-161 PDF (1.34 MB) | ||||
| DOI: 10.21608/caf.2024.389693 | ||||
 View on SCiNiTO | ||||
| Author | ||||
| Ahmed Fathi Elkhadrawi | ||||
| Assistant Professor, Economic Department, Faculty of Commerce, Damietta University | ||||
| 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 | ||||
| Keywords | ||||
| government debt; institutional quality; threshold effect; economic growth; GMM | ||||
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