FACULTAD DE CIENCIAS ECONÓMICAS Y EMPRESARIALES
2
Abstract
This paper examines the relationship between public debt and economic growth.
For Guatemala, and whole regions of Central America and the World. The time
interval under study is 2002-2013 for Guatemala, using quarterly data. For other
regions annual data from 1990 to 2013. The relationship between the traditional
indicators of public debt and economic growth indicators used is analyzed. I find
that this relationship is positive up to a certain level of public debt in terms of GDP,
and that after reaching a certain level of public debt, its impact on economic growth
becomes negative. The policy implications are to be implemented better criteria
for the acquisition of public debt as if it grows so excessive it will cause negative
impact on economic growth. The main conclusion is that for Guatemala increased
public debt generates a slight decrease in gross domestic product, compared with
Chile in which an increase in public debt leads to higher GDP, so that a high debt
relative GDP causes a decrease of GDP if used incorrectly and causes growth when
it is invested in projects that create wealth.
Key terms: public debt, economic growth, tax revenues, Guatemala.