Is More Government Debt Conducive to Economic Growth in New Zealand?

Year 2020, Volume: 5 Issue: 2, 20 - 24, 27.12.2020

Yu Hsing

Abstract

Applying an extended production function and using a sample of annual data over the period of 1985-2019, this paper finds that the government debt ratio and the growth rate of real gross domestic product in New Zealand exhibit an inverted U-shape relationship and that the threshold or turning point of the debt ratio in New Zealand is estimated to be 40.94%. It suggests that a rising debt ratio would raise the growth rate of real gross domestic product as long as the debt ratio is no greater than 40.94% and that a higher debt ratio would reduce the growth rate of real gross domestic product if the debt ratio is greater than 40.94%. In addition, a higher growth rate of employment or investment/GDP ratio raises the growth rate of real gross domestic product. Therefore, the 90% debt threshold proposed by Reinhart-Rogoff is not applicable to New Zealand.

Keywords

government debt, fiscal policy, Reinhart-Rogoff hypothesis

Supporting Institution

None

Project Number

None

Yeni Zelanda'da Daha Fazla Kamu Borcu Ekonomik Büyümeyi Destekler mi?

Abstract

Bu çalışma, 1985-2019 dönemi için yıllık veriler ile genişletilmiş bir üretim fonksiyonu tahmin ederek Yeni Zelanda'da kamu borç oranının ve reel gayri safi yurtiçi hasıla büyüme oranının ters U şeklinde bir ilişkiye sahip olduğunu ve Yeni Zelanda'daki borç oranının eşik değerinin veya dönüm noktasının %40.94 olduğunu ortaya koymaktadır. Borç oranı %40.94’ü aşmadığı sürece borç oranının artışının, reel gayri safi yurtiçi hasıla büyüme oranını artıracağını ve borç oranının %40.94'ü aştığı durumda daha yüksek borç oranının reel gayri safi yurtiçi hasıla büyüme oranını azaltacağı gösterilmiştir. Buna ek olarak, daha yüksek bir istihdam büyüme oranı veya yatırım/GSYİH oranı, reel gayri safi yurtiçi hasıla büyüme oranını artırmaktadır. Bu nedenle, Reinhart-Rogoff tarafından önerilen %90 borç eşiği Yeni Zelanda için geçerli değildir.

Keywords

Maliye Politikası, Kamu Borcu, Reinhart-Rogoff Hipotezi

Project Number

None

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