A Comprehensive Review of Literature on the Relationship Between Public Debt and Economic Growth and its Implications for the Philippines

Date

7-2020

Degree

Bachelor of Science in Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Jaimie Kim B. Arias

Committee Member

Gideon P. Carnaje, Jaimie Kim B. Arias, Ma. Angeles O. Catelo, Agham C. Cuevas

Abstract

The study aims to contribute to the existing literature that aims to determine the effect

of debt on economic growth and discuss its implications for the Philippines. To do so, the theoretical and empirical papers that looked into the debt and growth relation were reviewed, organized and synthesized. The study also traced the historical policy stance of the Philippines to provide a background on the movement of public debt and growth throughout the Philippine economy. Many of the papers reviewed in this study were undertaken in Western countries, and there a few which covered Southeast Asian countries and the Philippines. The study found no consensus in terms of theory, methodology and empirical results from the various papers reviewed. The difference between studies may be attributed to factors such as the theoretical framework used, the variables included in the study, the analytical tools, the nature and coverage of datasets analyzed, the time-frame of the study, and the model specifications, as well as the country-specific characteristic of debt and growth. This highlights the fact that policy recommendations and discoveries on certain countries may be inapplicable in the case of another. In the case of the Philippines, the studies reviewed also offered contrasting results. The differences in the conclusions are explained the same way, which is affected by the time frame of their studies and the methodological tools they used to analyze the relationship. The parallels between the Marcos regime’s “debt-driven growth” strategy and the Duterte administration’s “Build, Build, Build” program were also discussed. To ensure that the current administration’s plan on investing in large capital-intensive projects with long gestation periods will contribute to growth, the Duterte administration should be efficient in their expenditures.

Language

English

LC Subject

Literature Review, Public Debt, Economic Growth

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2020 E2 G37

Document Type

Thesis

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