PUBLIC DEBT AND ECONOMIC GROWTH - A POLEMIC DISCUSSION.

The global financial crisis has influenced economic performance of the world economy and economic theory as well. The crisis has underlined the fiscal position as a fundamentally fragile element of the Euro Area members' economies and it has also proposed the question whether the growth has not been systematically fed and accelerated by increasing public indebtedness. The paper focuses on the quantification of relation between economic performance and public debt. There is an analysis of 27 EU countries and other 13 OECD economies data (1971-2010) divided into two groups - developed economies and less developed emerging markets and categorized into four blocks. Main findings of the paper are following: increasing public indebtedness as a percentage of GDP has led to lower economic performance in analysing group of 40 countries. The difference between the highest and lowest category of public debt level is almost 2 percent. It is supposed that unsufficient GDP growth might even deepen the ongoing debt crisis. [ABSTRACT FROM AUTHOR]