Public Debt and Macroeconomic Dynamics: A Simulation Model with Variables of Interest Rate, Economic Growth, Domestic Consumption, Government Expenditure, and Net Exports

DOI

10.2991/978-94-6463-346-7_30How to use a DOI?

Keywords

—Public Debt; Interest Rates; Economic Growth; Domestic Consumption; Government Spending; Net Exports

Abstract

This research explores causal relationships among public debt, interest rates, economic growth, domestic consumption, government spending, and net exports. It employs a panel vector model to investigate these relationships, assuming that all variables are endogenous and influenced by their own past values and those of other variables. The findings indicate that public debt negatively affects most variables, suggesting it hinders the economies of Indonesia, the Philippines, Malaysia, and Thailand. Rising interest rates also disrupt exports in ASEAN member countries. Surprisingly, government spending increases public debt. Consumption in these regions encourages exports through international trade agreements, and exports, in turn, boost government spending and state income. Economic growth, as measured by GDP, drives all variables, underscoring its role in both the monetary and real sectors of these economies. However, it’s important to note that data availability and the research period were limitations. Based on the results, it’s recommended that the government exercise caution in increasing public debt and balance short-term economic pressures with long-term economic drivers to mitigate debt’s impact on the economy.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Sebastiana Viphindrartin
AU  - Regina Niken Wilantari
AU  - Zainuri
AU  - Rudi Kristiawan
AU  - Suryaning Bawono
AU  - Gusni Ariansyah
PY  - 2024
DA  - 2024/01/11
TI  - Public Debt and Macroeconomic Dynamics: A Simulation Model with Variables of Interest Rate, Economic Growth, Domestic Consumption, Government Expenditure, and Net Exports
BT  - Proceedings of the Conference on SDGs Transformation through the Creative Economy: Encouraging Innovation and Sustainability (TCEEIS 2023)
PB  - Atlantis Press
SP  - 160
EP  - 166
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-346-7_30
DO  - 10.2991/978-94-6463-346-7_30
ID  - Viphindrartin2024
ER  -