Debt of Nonfinancial Corporations and Economic Growth

Bibliographic Data

ID6108788
AuthorsVratislav Izák (Grant Medical Center, corresponding author)
Year2013
Volume61
Issue2
Pages171-187
Publication date2013-04-01
Open AccessYes
TypeARTICLE
VenuePolitická ekonomie (JOURNAL)
Journal identifiersISSN: 0032-3233 • E-ISSN: 2336-8225
PublisherPrague University of Economics and Business (PUBLISHER • CZ)
DOI10.18267/j.polek.893
OpenAlexW317306219
LanguageEN
Citations received2
References cited16

The recent financial and economic crisis has put considerable strains not only on public but also on private finances. In the paper we analyse the development of nonfinancial corporate debt (measured as liabilities minus shares and other equities) in the time period 1995-2010 for 17 European OECD countries. In growth equations the dependent variable is the growth rate of real GDP per head and forward moving averages of this growth rate. Descriptive statistics reveal that in the examined period the nonfinancial corporations' debt has been rising steadily (first of all in Sweden, the Netherlands and Portugal). The basic estimation technique has been panel fixed effects corrected for heteroscedasticity and autocorrelation. The coefficients showing the impacts of corporate debt on GDP growth have had the sign minus and have been highly statistically significant. A 10 percentage point increase in nonfinancial corporations' debt has been associated with an approximately 5 basis point reduction in per head real GDP growth. We have used also cross-section specific and period specific coefficients to gain a more profound look into the matter

Basis point · Debt · Debt ratio · Econometrics · Economics · Financial economics · Interest rate · Macroeconomics · Monetary economics · Panel data · Fiscal Policies and Political Economy · Fiscal Policy and Economic Growth · Monetary Policy and Economic Impact

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