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Determinants of public debt in southern mediterranean countries and european countries: a tale of two regions

ouhibi, saoussen (2021): Determinants of public debt in southern mediterranean countries and european countries: a tale of two regions. Published in:

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Abstract

The objective of this paper is to identify the determinants of public debt in the southern Mediterranean countries and the European countries for the period 1990–2017 by using dynamic panel data model estimated by Generalized Method of Moments (GMM). In fact, empirical evidence indicates a significant positive impact of interest rates and unemployment rate on public debt and significant negative impact of inflation and real exchange rate on public debt. In European countries, inflation and interest rate has a negative and statistically significant effect on public debt, however, the domestic investment, real exchange rate and foreign direct investment has a negative and statistically significant effect on public debt.

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