Role of Public and Privacy Debt on Economic Growth in Albania

Abstract

Albania has managed to maintain a positive economic growth and macroeconomic stability over the past decade, but its high level of public debt, with an increasing trend over the last three years, has been seen as very worrying in the eyes of many domestic and foreign economists. When it comes to debt, both public and private debt must be taken into account. Private debt analysis takes on particular importance because private debt is associated with financing business projects and increasing consumer demand, which serve economic growth and improve the country's macroeconomic parameters. This paper aims to study the role of public and private debt on economic growth in Albania for the period 2014-2018, as well as the main determinants of these two indicators. The methodology used is based on econometric regression analysis. The results showed that public and private debt has a statistically significant impact on economic growth in Albania. The research question of this paper is: Does private and public debt have an impact on economic growth in Albania?