Public debt's predictors in EU: evidence from members and non-members of European Monetary Union

The global economic crisis destabilised the public debt of many countries. The purpose of this paper is to investigate the predictors of public debt in European Union countries divided into non-member countries and members of the European Monetary Union in the period from 2001 to 2018. The aim is to...

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Published in:Economic research - Ekonomska istraživanja 2020-01, Vol.33 (1), p.3562-3579
Main Authors: Pjanić, Miloš, Milenković, Nada, Andrašić, Jelena, Kalaš, Branimir, Mirović, Vera
Format: Article
Language:English
Subjects:
Comparative analysis
Credit policy
Data collection
Debt
Economic crisis
Economic growth
Economic indicators
Economic policy
Economic theory
European Monetary Union
European Union
Fiscal policy
Interest rates
linear mixed procedure
longitudinal data
Monetary unions
Policy making
Profiles
Public debt
Research design
Research methodology
Taxation
Unemployment
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Summary:The global economic crisis destabilised the public debt of many countries. The purpose of this paper is to investigate the predictors of public debt in European Union countries divided into non-member countries and members of the European Monetary Union in the period from 2001 to 2018. The aim is to discover their relationship with public debt and make recommendations for economic policy-makers. The empirical analysis was based on comparative research design, quantitative methodology and secondary data collection. It included 13 variables, with public debt being the dependent variable and the selected 12 economic indicators were treated as predictors. The analysis was based on a procedure for linear mixed models in the IBM SPSS. The basic finding was that only unemployment was statistically significant predictor of public debt in both groups of countries. Other predictors differed, and there were statistically significant differences in the magnitude of their impacts. Obtained results indicate that unemployment is one of the most important problems of all European Union countries. In addition, a major challenge for monetary and fiscal policy-makers will be profiling adequate tax, credit, and interest rate policies to reduce debt and accelerate economic growth.
ISSN:1331-677X
1848-9664
DOI:10.1080/1331677X.2020.1776137