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LUND UNIVERSITY LIBRARIES

Växer pengar på träd?

Sandin, Thea LU (2021) NEKH04 20221
Department of Economics
Abstract
This study examines the relationship between the public debt quota and economic growth while using the Modern Monetary Theory (MMT) as a theoretical base. This is done with a panel data regression using 81 countries over a time period from 1980-2019. MMT emphasises that countries in control of their monetary base, monetarily sovereign countries, can hold a larger public debt without negative effects on economic growth. To test the MMT- hypothesis the sample was divided into two groups based on their monetary regime. An interaction term was then created to analyse the effect public debt had on growth in monetary sovereign countries. The results were insignificant on public debt levels for countries in general and for those with monetary... (More)
This study examines the relationship between the public debt quota and economic growth while using the Modern Monetary Theory (MMT) as a theoretical base. This is done with a panel data regression using 81 countries over a time period from 1980-2019. MMT emphasises that countries in control of their monetary base, monetarily sovereign countries, can hold a larger public debt without negative effects on economic growth. To test the MMT- hypothesis the sample was divided into two groups based on their monetary regime. An interaction term was then created to analyse the effect public debt had on growth in monetary sovereign countries. The results were insignificant on public debt levels for countries in general and for those with monetary sovereignty. A potential reason for this could be differences in how the debt is being used and whether it finances growth enhancing projects or not. However, the results indicates that MMT is not sufficient to explain how public debt affects economic growth. (Less)
Please use this url to cite or link to this publication:
author
Sandin, Thea LU
supervisor
organization
course
NEKH04 20221
year
type
M2 - Bachelor Degree
subject
keywords
public debt, sovereign money, Modern Monetary Theory, panel data, economic growth
language
Swedish
id
9083518
date added to LUP
2022-10-10 09:17:21
date last changed
2022-10-10 09:17:21
@misc{9083518,
  abstract     = {{This study examines the relationship between the public debt quota and economic growth while using the Modern Monetary Theory (MMT) as a theoretical base. This is done with a panel data regression using 81 countries over a time period from 1980-2019. MMT emphasises that countries in control of their monetary base, monetarily sovereign countries, can hold a larger public debt without negative effects on economic growth. To test the MMT- hypothesis the sample was divided into two groups based on their monetary regime. An interaction term was then created to analyse the effect public debt had on growth in monetary sovereign countries. The results were insignificant on public debt levels for countries in general and for those with monetary sovereignty. A potential reason for this could be differences in how the debt is being used and whether it finances growth enhancing projects or not. However, the results indicates that MMT is not sufficient to explain how public debt affects economic growth.}},
  author       = {{Sandin, Thea}},
  language     = {{swe}},
  note         = {{Student Paper}},
  title        = {{Växer pengar på träd?}},
  year         = {{2021}},
}