Is more government debt or currency depreciation expansionary? The case of Poland

Abstract

This paper finds that Poland’s aggregate output is positively associated with the government debt-to-GDP ratio, the real effective exchange rate during 2002.Q4-2007.Q3, the real stock price and the real oil price and negatively impacted by the real effective exchange rate during 2007.Q4-2016.Q4, the real interest rate and the expected inflation rate. Hence, the current level of the debt-to-GDP ratio is sustainable, and real depreciation may be contractionary or expansionary depending upon the time period under consideration.

Keywords

• government debt
• real appreciation or depreciation
• stock prices
• oil prices