Investigating the Effect of Public Debt on Economic Growth in Selected Islamic countries

The purpose of debt from both domestic and foreign sources is to bridge the resource gap between savings and investment. But not paying attention to debt and its role in the process of economic growth and development, may lead to adverse effects of debt on economic growth and also affect development programs. Therefore, the purpose of this study was to investigate the effect of public debt on economic growth in selected Islamic countries. For this purpose, data from 12 selected Islamic countries during the period 2000-2019 were used. Then, using panel data-based methods such as panel cointegration techniques, the best estimation model was selected. The results of estimated model showed that in general, the variables of financial development index, inflation, population growth, quality of institutions and life expectancy increased GDP per capita or in other words, economic growth in selected Islamic countries. The results also showed that the variables of public debt and gross fixed capital formation have a negative and significant effect on economic growth in selected Islamic countries.