Public debt in EU countries harms growth, ECB paper argues
Researchers find public debt crowds out investment but private debt is used efficiently
A working paper published by the European Central Bank estimates the impact of public and private debt on GDP growth in 25 European Union countries from 1995 to 2015.
In Indebtedness in the EU: a drag or a catalyst for growth?, Alina Mika and Tina Zumer find that in the countries they survey, private debt is associated with rising income levels. They argue that this is because “debt allows for consumption and investment smoothing”. Households and non-financials borrow efficiently, in a manner
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