An Empirical Research On National Debt And Growth

Greece broke out debt crisis in late2009, debt crisis of the domino effect gradually began to spread from the Greek to the entire European Union area, and also became a obstacle which had restricted the global economic recovery. From1981, China began to restore issue bonds, which make the debt scale grow rapidly, and the national debt has play an important role in promoting economic development and national life.Especially since1998, our country’s economic development has been seriously effected by the Asian financial crisis, and at the same time, the shortage of Effective demand in our country has appeared. In order to resist the crisis and maintain the steady economic growth, China began to implement expansionary fiscal policy. Facts have proved that the national debt has played a vital role in the expansion of domestic effective demand, the rapid economic growth and the employment rate. But at the same time all sorts of national debt risk is increasing obviously, by the end of2011, China’s national debt balance actual number is7.204451trillion yuan. In the debt crisis background, studying the relationship between national debt and economic growth, as well as our country whether there is an outbreak of sovereign debt crisis possibility is a worthy of discussion.This paper is divided into six parts. The first part is a introduction, which introduces the writing background and the significance of the research between public debt and economic growth, and also introduce the domestic and overseas scholars’research status about national debt and economic growth. The second part generalizes the scale of the national debt and the bearing debt ability of our country. The third part theoretically analyzes the national debt and the economic growth in the Ricardian equivalence theorem and the economic growth model. The fourth part introduces the present panel data model modeling:mixed regression model, fixed effect model and random effect model, and model choice of testing method. The fifth part, according to the different data processing means, divides the empirical part into two parts, namely: no section data processing, section data processing, and make a research on national debt and economic growth from two perspective, namely:debt scale and the economic growth, the initial debt level and the economic growth, which includes China and other14countries and also make a comparison between the analyses of methods and the conclusions. The sixth part, according to the analysis of the previous chapter, draws some conclusions and gives some relevant countermeasures to our country debt crisis.In this paper, the above analysis gives the following conclusions:In the debt crisis wreak havoc of the environment, the national debt can not provide powerful support, and the debt burden has dragged the pace of economic growth in the European countries. No matter in developed countries or developing countries, long-term of high debt will produce unfavorable effects. The efficiency of the debt depends on the government’s efficiency level, and the national debt which is a policy tool need good monitoring and capital effectively planning, thus serve for the periodic economic growth. As for our country, the central government financial condition basic is good, but the existence of the financing and investment platform quantity of local government, the large debt scale and its continuous rising should be alert, which prevent the "Chinese sovereign debt crisis" from happening.The innovation point in this paper is the contrast,namely:debt scale and the economic growth、the initial debt level and the economic growth, which make1981-2010data for piecewise, namely:1981-2010years of data is divided into six sections and every five years is a time period. In each time period, the beginning year is1981,1986,1991,1996,2001,2006, by which we study the relationship between initial debt scale and economic growth. Thus this paper reveals the relationship between debt and economic growth in a futher way through the contrast of the long-term and short-term respectively and by making data for piecewise, the model’s coefficient is lager and significant, which shows long structural changes of economic variables.