Growth in a time of austerity: evidence from the UK

This paper uses an empirical approach to test the specific causal relationship between debt and growth in the UK, in the context of the debate surrounding the use of a policy known as austerity measures. This time series perspective makes use of more recent Granger causality and cointegration tests...

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Bibliographic Details
Published in:Scottish journal of political economy 2017-09, Vol.64 (4), p.349-375
Main Authors: Amann, Juergen, Middleditch, Paul
Format: Article
Language:English
Subjects:
Austerity policy
Causality
Cointegration analysis
Economic crisis
Economic growth
Economic models
Economic policy
Macroeconomics
Public debt
Time
Time series
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Summary:This paper uses an empirical approach to test the specific causal relationship between debt and growth in the UK, in the context of the debate surrounding the use of a policy known as austerity measures. This time series perspective makes use of more recent Granger causality and cointegration tests that allow for non‐stationarity in macroeconomic time series data in the presence of structural breaks. Controlling for exogenous shocks associated with the period around the financial crisis, we find no evidence of a causal relationship between economic growth and public debt for the UK.
ISSN:0036-9292
1467-9485
DOI:10.1111/sjpe.12132