Assessing the impact of public debt on economic growth: an analysis on Portugal

In the current economic framework, characterized by a global increase in the public debt burden and weak performances concerning economic growth, it is imperative to study and to understand the hypothetical impact of public debt on economic growth. Although there already exist several studies in this field, this research aspires to provide information regarding this phenomenon in Portugal. A Markov switching model is estimated, using quarterly data spanning the period from 2000 to 2015, in order to assess the impact of public debt on economic growth when the economy is either in an expansionary or contractionary environment. The result extracted from this empirical analysis suggests that public debt harmed economic growth in Portugal during recessions, having no impact during economic expansions