Relationship Between Public Debt and Key Economic Variables: A Case Study of Pakistan

Abstract

The study is about finding out the relationship between public debt and economic growth in Pakistan. The study is based on annual time series data starting from 1981-2010. The dependent variables which have been considered for this research are GDP growth rates, Investment and manufacturing rates which were regressed in separate regression models against a single independent variable that is Public debt. The estimations show a negative relationship between public debt and all the three dependent variables. The results of the study shall help the policy makers in formulating appropriate debt management policy. It shall also encourage further research in this area.