Public Debt Sustainability in E.U.

Abstract

The topic of public debt sustainability is an important one, and the rapid increase of public debt for the E.U. countries following the Covid-19 pandemic raised the importance of this topic. In the article, we analyzed the way in which the economic growth and the public budget deficit influence the public debt for the E.U. states. A multifactor regression model based on panel data was used, and the result indicated that there is a valid relationship between these variables, and this suggests a certain form of sustainability of public finances and public debt for these states. Therefore, there is a negative relationship between economic growth and public debt and there is a positive relationship between public budget deficit and public debt.

Keywords

• public debt
• sustainable debt
• cointegration
• covid-19
• european union