The existence of relationship between debt and recession

الملخص EN

This paper examines the causal relationship between recession and debt by using Gross Domestic Product (GDP) and four debt indicators.

Co-integration and Vector Error Correction Model (VECM)methods were implemented.

The co-integration test suggests along run relationship between GDP and all debt indicators.

The error correction coefficients in the Vector Error Correction Model (VECM) indicate that there is abidirectional causality between every debt variable and GDP in the long run.

The flndingis consistent with the debt-recession hypothesis.