How Is Public Debt Related to Economic Growth and Unemployment?

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How is public debt related to economic growth and unemployment?

In this project different economic factors will be compared with each other to see if any correlations exist between them. These will perhaps explain certain trends and changes we see. The three factors focused on in this report are GDP growth, Government Debt and Budget surplus/deficit. In the data provided there is a very large standard deviation for GDP (see appendix). In both 2009 and 2010 the standard deviation was over four and a half times larger than the average of GDP itself. This will make it hard to create general assumptions for all countries to assess whether different factors correlate with each other. Even other factors such as GDP growth have relatively large standard deviations. This may cause difficulties in examining factors. An example of ambiguous data can be seen when comparing Canada and India. They both had fairly similar GDP and debt figures in 2010 but India’s GDP growth was around three times that of Canada’s. This shows that we cannot make hard-and-fast rules on links between different factors but we may be able to make general connections and assumptions. Distribution of GDP Growth and Government Debt within countries Figure 1:

GDP Growth (2009-2010)
60 50 Number of Countries 40 30 20 10 0 Frequency GDP Growth 2009-2010 (% change)

As we can see from Figure 1 distribution of GDP growth is relatively small, with 93.4% (171/183) countries having a growth between 0% and 10%. If we then look at Figure 2 we see that Government Debt is much more spread out compared to GDP growth. This shows that very few countries are able to achieve very high economic growth and few produce negative growth, but the majority of countries have a steady rate of GDP increase.

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Figure 2:

Government Debt (2010)
14 12 10 Frequency 8 6 4 2 0 0 10 20 30 40 50 60 70 80 90…...

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