How Is Public Debt Related To Economic Growth And Unemployment?

905 words - 4 pages

How is public debt related to economic growth and unemployment?

Public debt as a factor will influence economic growth and unemployment. Economic growth is usually presented as gross domestic product (GDP) growth. There are some data including GDP of countries in 2010 and 2009, budget surplus or, total central government debt and unemployment and government debt in U.S.A. Those data have units and definitions below.

Definitions: GDP 2010: GDP 2009: Budget surplus/deficit: GovtDebt:
Unemployment Debt

Gross Domestic Product in 2010 (millions constant 2000 US$) Gross Domestic Product in 2009 (millions constant 2000 US$) Budget surplus/deficit as % of GDP in 2010 Total central ...view middle of the document...

The median of government debt is 48,2. Different countries have different debt and budget situations, there are a huge difference between maximum and minimum, and standard deviation is also high. All the result can available to see on the appendix.

Bin

Next, make two frequency tables for GDP growth and Government debt. The first frequency table is for GDP growth, which have bin widths of 2.5 and beginning with the interval 10.0 to -7.5, and the upper bin set at 17.5 to 20.0. Showing like this table at right:

Frequency 0 0 10 3 20 3 30 7 40 8 50 12 60 7 70 5 80 3 90 5 100 2 4

Bin
For government debt, there is a bin widths of 10, beginning with the interval 0 to 10, and the upper bin set as 90 to 100. Presented like the right table: Now we can know the GDP growth and government debt distribution in different ranges. According to the frequency tables and histograms, most counties in 2010 GDP increased 2.5% to 12.5%. And most counties have 30% to 60% government debt as percentage of GDP in 2010. After made frequency tables, we can make two histograms of GDP growth and government debt, which showing below:

Frequency -10 -7.5 -5 -2.5 0 2.5 5 7.5 10 12.5 15 17.5 20 0 1 1 4 15 38 54 38 26 2 2 2 0 1

The relationship between government debt and GDP growth can be showed in a scatter diagram. If government debt dives GDP growth, the government debt should be the xaxis, and GDP growth should be the y-axis in the...

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