Review of literature

3 
Yamin, I., Al_Kasasbeh, O., Alzghoul, A., Alsheikh, G. (2023) 
The Influence of Public Debt on Economic Growth: a Review of Literature
 
was widely cited and influential among academics, commentators and policymakers in the 
debate over austerity and fiscal policy in debt-burdened economies. Consequently, the debt 
crisis has progressed uniformly throughout international economies over time. Consequently, 
there is currently little agreement on this issue. The disagreement between theoretical and 
empirical results about the debt-growth relationship has also contributed to the disparities in 
policy approaches among the investigated nations. 
Public debt typically refers to the government's obligations and consists mostly of debt 
instruments and loans. According to the International Monetary Fund (2013), public debt refers 
to the contractual financial commitments central government has pledged to repay to creditors 
at a future period, including both the principal amount and accumulated interest. In particular, 
public debt is subdivided into domestic public debt and foreign public debt, based on the 
location of debt holders, the currency in which the debt is denominated, and whether the debt 
was issued on the international debt market or the domestic debt market (Elmendorf & Mankiw, 
1999). 
The United Nations' sustainable development goals (SDGs) specified a list of objectives 
that must be attained by 2030. One of the objectives is to increase economic growth (United 
Nations, 2018). As the global economic structure shifts toward the fourth industrial revolution, 
governments have been compelled to invest in crucial sectors such as artificial intelligence, 
machine learning, technical advancement, and human capital (Al-kasasbeh et al., 2022). 
Without these crucial investments, economic growth would stagnate and nations will lose 
competitiveness if investments are diverted towards conventional industrial processes (World 
Economic Forum, 2017). Investing in the above-mentioned crucial sectors takes a substantial 
quantity of capital. 
Consequently, taxes are considered one of the possible sources of income to support 
crises (Ono & Uchida, 2018). However, because taxing has distorting effects on economic 
growth, policymakers are less fond of it (Barro, 1979). If a country lacks finances, public debt 
is the sole viable alternative for financing government spending and other economic initiatives. 
This argument adheres to the Ricardian invariance theorem, which states that taxes imposes a 
disproportionate burden on the public by increasing the cost of living and decreasing people's 
buying power (Barro, 1979). 
Against this backdrop, the primary purpose of this essay is to analyse the current 
economic research produced between 2010 and 2020 on the link between public debt levels and 
economic growth, examining both empirical evidence and theoretical frameworks. This 

---

Intern. Journal of Profess. Bus. Review. | Miami, v. 8 | n. 4 | p. 01-11 | e01772 | 2023.