ETD system

Electronic theses and dissertations repository


Tesi etd-01302019-161123

Thesis type
Tesi di laurea magistrale
A Comparative Analysis of the Effects of Public and Private Debt in the Euro Area
Corso di studi
relatore Prof. Roventini, Andrea
Parole chiave
  • Private debt
  • Public debt
  • Financial Crisis
  • Great recession
  • Euro Area
  • Sovereign debt crisis
Data inizio appello
Secretata d'ufficio
Riassunto analitico
The objective of this Thesis is to investigate the effects of public and private debt in the Euro Area. This work stems from the recent 2007-2008 Financial Crisis and the consequent European Sovereign Debt Crisis. We exploit a panel of eleven countries of the Euro Area, stretching from 1960 to 2017, to search for the economic impact of public and private debt in the region and between different groups of countries.
In line with Batini et al. (2018), we use the Fixed Effects estimation to derive our main results. On the one side, we show that private debt, under different specifications, is always detrimental to future economic growth, regardless of its level or the level of public debt. Moreover, we show that the bad component of private debt is the household debt whereas corporation debt could have a positive impact on economic growth.
On the other side, public debt contribution is mostly beneficial to GDP growth. However, its positive impact fades away when the level of public debt surpasses a certain threshold. Therefore, we cannot find consistent evidence in support of the non-linear negative relationship between public debt and economic growth put forward by Reinhart and Rogoff (2010).
On the contrary we find a non-monotonic behaviour of public debt and economic growth that goes in the opposite direction: from positive, when public debt is low, to non-significant, when the latter is high.
At last, our findings hold when we perform several robustness checks.