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Investigating the relationship between public debt and economic growth the case of Portugal Investigating the relationship between public debt and economic growth CAMPUS. The case of Portugal 11,499. The Implications of public obligation on economic growth are very Important to be researched as background to economic policies of a country. A country partly based on the comprehension of the relationship between public debt and economic growth to identify countries situation and draw specific plan to run a sound public debt policy for economic development.
Therefore, a research into factors in which the amount of public debt affects the determinants of economic growth is necessary for a country to find out the situation of public debt and how to maintain its sound level to promote the economy. This research uses regression analysis model to examine the relationship between economic growth and public debt in case of Portugal with respect to factors such as investment and monetary policies. In which, Investment Is represented by foreign investment and domestic capital meanwhile, monetary policies are indicated by Inflation rate.
With respect to research methodology, the research conducts literature review regarding both theoretical and emplace background and uses secondary data as data collection method and quantitative method as the research method. The process of data collection is implemented through data gathered from the official resources of WEB and COED including real GAP, public debt, inflow FED, inflation rate and annual capital growth in Portugal for the period 1992 to 2002.
After conducting data analysis and regression analysis, the research findings shows that four variables namely public debt, foreign direct investment, monetary policy and investment have influences on economic growth demonstrated through GAP indicator. In the case of Portugal, public debt and foreign direct investment have positive relationship with GAP, while monetary policy and investment have negative Influence in GAP. Among those variables, public debt Is the most significant predictor at 32 level of significance.
After findings, analysis and discussion, the research also comes to an end with several recommendations for Portugal based on the research findings on he Portugal case as well as some implications for further researches. First and foremost, my appreciation goes to all those who offer such a golden opportunity to conduct this graduation paper. I would like to thank () for giving me permission to implement the paper. I owe a debt of gratitude to my supervisor, 0, (. ). Without her/his enthusiastic guidance, persistent help and valuable encouragement, this paper would not have been possible.