Impact of Public Debt Burden on Economic Growth of Bangladesh: a Var Approach

From 2003-2004 to 2006-2007, annual Real Growth Rate increases from 8.4% to 9.7%. Because of the summer’s credit-market crisis, the Indian GDP Growth decrease to 9.0% from 2007 to 2008 and Indian government estimates GDP Growth for 2008-2009 is 7.1%. The decrease of GDP ascribes the global financial crisis which affects India primarily through trade and capital outflows (The World Bank, 2008:16). On trade, exports are possible to weaken and make its contribution to GDP growth may be drop sharply. However, during

This growth in national debt has blunt consequences on inflation, interest rates and growing economy. Foreign control of large amounts of government debt means that the taxes will have to be raised to repay debt and percentage owned to overseas governments which is not acceptable. Assuming that trade deficiency also exists it will lead to depreciation of dollar which effect its position as a reserve currency, and if during this process any new currency emerge as a replacement of reserve currency, higher interest rates will be required to sell the debt to foreign countries (Inflation). Raised interest rates have a negative impact on the economy and high accumulation of debts leads to high interest rates (Spending). Hence the economy suffers. This means that the funds for government programs like Social Security and Medicare are not enough (Economic Progress Under Obama). Another consequence of high national debt is the reduced flexibility in fiscal policy (Spending).

economy, due to income debt ratio. These three examples show the negative effects on the

The United States national debt is large. The U.S. Debt-to-GDP ratio has grown to over 60 percent in recent years. We are more than $15 trillion in debt. In this paper I will address the federal budget, the United States debt, and the resulting impacts on society in several sectors.

There are a number of both long and short term effects that a large budget deficit/debt can have on an economy. First, there will be increased borrowing, meaning the government will need to borrow from the private sector (Pettinger, 2014). Second, there will be higher debt interests payments, meaning selling bonds will increase the national debt, leaving future generations to have to pay higher taxes (Pettinger, 2014). Third, an increase in aggregate demand will occur, which could potentially cause a higher Real GDP and inflation to

Thus some government spending is necessary for the successful economic conditions. Examples of good government spending would be maintaining the legal system which can have a high rate of return. However in general the government doesn’t use the financial resources effectively. It promotes economically abominable decisions. The welfare programs encourage people to remain unemployed. Flood insurance programs encourage people to construct buildings and residences in high probability flood areas. These and other such programs reduce economic growth if the government borrows money and spends on them. For every dollar the government spends, it translates to one less dollar in the productive sector of the economy. In other words this slows down the growth since the political forces dominate how the money is spent. In summary, Governments should not be allowed to borrow during recession. The disadvantage being that the government can use this money in an inefficient measure. Non-availability of borrowing power would force the government to make sound economical decisions during a recession and not move into the next

Furthermore, when the government borrows all this money another problem is created called “crowding out.” The interest rates are increased because of the deficit spending from the borrowing. Hence, the financing needed by private businesses is more difficult as well as the purchasing of new equipment or construction of new factories. Government borrowing deteriorates the strength of the economy as well as builds debt. Private spending decreases when government spending increases. Stimulation from government into the economy should only occur once it has been given a chance to recover on its own and failed.

The United States has been in debt since 1775, paying for the American Revolutionary War. Through many years, tremendous debt has built up. America is now at a total of $19 trillion dollars. There are many dilemmas dealing with our economy, this all starts with America’s debt. The government has overused its authority in regard to America’s national debt by erratic spending, excessive borrowing, and by ignoring the average tax paying American.

results of the debt. It is a look at both the factual causes and the arguments

This paper sought to answer the question whether Federal Debt is Harmful to the United States Economy. The paper examines and assesses the possible effect of high levels of debt on the United States in the context of the recent financial crisis. The analyses provides significant insights on understanding the adverse impact of national debt dynamics on medium and long term economic growth, with a special focus on the United States. This paper adopted a general theoretical model enhanced with a debt variable to address the possible issues of bias. A fixed effect panel regression was used to control factors of time and country-specific elements. Concerns of possible effect of low economic growth on increased levels of debt were addressed using

The underlying truth of deficit spending is the same whether it is used in finance, economics or government that the more is spent, the less income is made (Buzzle, 2014). Many economists argue that deficit spending will hinder economic growth while others disagree. Deficit spending has been the topic of debate for a very long time. Deficit spending is “when government's expenditures exceed its revenues, causing or deepening a deficit. This excess spending needs to be financed through borrowing, likely from foreign governments. The increased government spending can help stimulate the economy as more money flows in, but the jump in borrowing can have an adverse effect of raising interest rates” (Investopedia, 2013). In simpler terms, deficit spending is when a governing body of a nation needs to borrow money from other nations due to the nation being in a recession. Governments borrowed against future revenues so that they are able to finance domestic welfare spending before the twentieth

There are many original and ingenious opinions and analysis related to a topic on U.S. government budget deficit and government obligations and liabilities. As a result of the economic circumstances and current consequences of budget deficit in the United States there have been many controversial hypotheses of what future may bring to the American people. Therefore, I would like to face deeply inquire in to of how our countries government deficit and outstanding debt will affect its citizens and I also assume there are new challenges taking place as the consequence of rising government debt.

One of the major causes of poverty throughout the world is National Debt. Also known as public debt, national debt is defined as “the total financial obligations of the central government of a nation usually in the form of interest-bearing government bonds” (National debt 2015). International debt is complex challenge in magnitude with poverty affecting the welfare of millions of people, in many countries all over the world. However at the same time international debt does not only affect those in the country but rather affects many international and private sources of financial institutions. National debt presents many moral challenge

This paper is mainly focusing on the historical background and causes of debt crisis in late 1970s and 1980s.

In terms acceleration of economic growth is based on the measurement of GDP, MALAYSIA HAS recorded a growth of 5.1% last year. Although it is lower than 7.2% in 2010, but it was so roaring in the context of a difficult global economic environment and uncertainty. In contrast, global economic growth has dropped from 5.2% in 2010 to 3.8% in 2011 while the economy of the developed countries like USA, Germany, UK, France and Japan also recorded weak growth of respectively 1.5%, 2.7%, 1.1 %, 1.7% and -0.5% in the same year; far lower than Malaysia's achievements. Following a satisfactory GDP growth was assisted by the Federal government revenue increased by RM13.2 billion in 2011 through increased collection of IRB estimate of RM109.7 billion compared with RM96.5 billion the government has managed to reduce its fiscal deficit to 5.0% compared projection of 5.4%. This means that the GOVERNMENT has successfully steered the nation's economy as well as the control and management of public funds wisely in the past 3 years in a row when managed to bring down the fiscal deficit from 7.0% in 2009 to 5.6% (2010) and 5.0% in the past year in a expanding economy.