The Impact of Public Debt on Economic Growth

Abstract

One of the main areas of inquiry nowadays is how government debt influences the growth of the economy. Researchers have come to different conclusions regarding the manner in which public debt consequences growth in the economy. As a result, this essay examines how public debt affects an economy or a group of economies' ability to grow. The paper examines the effect of the federal debt on commercial growth by compiling and evaluating relevant research from 2018 to 2023. Threshold is a crucial piece of reference information for examining the process by which public debt has influenced expansion in the economy. The objective is to evaluate the consequence of debt incurred by governments on the development of the economy, determining whether it is favorable or adverse. If the ratio of debt to GDP falls below a certain threshold, it indicates that the public economy is positively contributing to economic growth. A higher threshold value also suggests that the economy can handle additional public responsibilities, increasing the likelihood of popular support for economic expansion. This implies that there exists a complex and nonlinear relationship.