AN EMPIRICAL RESEARCH OF THE RELATIONSHIP BETWEEN PUBLIC DEBT AND ECONOMIC GROWTH IN VIETNAM

Le Thi Thanh Ha, Andi Azhar, Wing-Keung Wong

Abstract


ABSTRACT


The paper uses the Vector Auto Regression (VAR) model and Granger Causality Analysis to analyze the two-way relationship between public debt and economic growth in Vietnam between 1992 and 2016. Pulse response functions, variance decomposition, ADF unit tests, residual autocorrelation assays and co-alignment tests were performed to examine the transmission mechanism of shocks, fluctuations of variables and the suitability of the model. The results show that there is a one-way causal relationship between public debt and economic growth in Vietnam. This is the basis for the writer to propose policy suggestions on public debt and economic development in Vietnam.

KeyWords: Public Debt, Economic Growth, VAR Model, Granger Causality Analysis


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