Public Debt, Financial Development and Economic Growth

The goal of every nation's economic policy is to ensure a high and stable level of economic growth. The importance of a financial system in promoting economic growth and reducing poverty has been demonstrated by a number of empirical studies. It is also well known that a country's public borrowing and its nature are important determinants of its economic performance. Moreover, the broader economic consequences of public debt buildups is a topic that is receiving substantial attention in academic and policy circles. Such analysis becomes even more relevant in light of the recent meltdown of the world financial system followed by the incidence of public debt. This book investigates the relationship between public debt composition, financial development, and economic growth by controlling the macro and institutional factors in which the debt was issued in countries grouped by income levels. Different features of these issues and their mutual implications are examined through the application of empirical and theoretical approaches.