The Impact of Debt Financing on Economic Growth

Aims: This paper focuses on the issue of the impact of debt financing on economic growth, especially the long-term economic growth in Morocco.

Duration of Study: The public debt and economic growth evolution between 1984 and 2018.

Methodology: In order to answer our research question, we adopt a positivist epistemology with a deductive methodological approach through an econometric modeling. An autoregressive model “VAR” was applied using the stationarity and co-integration’s tests and causality’s tests.

Results: The findings revealed a significant positive relationship between public debt and economic growth in the period between 1984 and 2018. This is due to the good management strategy of the public debt and the good institutional governance. However, the level of the external public debt service has no significant impact on real growth rate.