Abstract

This study aims to investigate the relationship between government debt and economic growth in Morocco and Tunisia, as they are one of the emerging economies that trying to achieve economic development goals. In order to achieve the research goal, theoretically relationship between economic growth and government debt have been discussed according to economic literature. As well, the research relied on standard analysis in the relationship between economic growth and central government debt in morocco and Tunisia for the period (1990-2016). Unit root tests have been used to confirm the level of stability of time series. And then estimate the regression equation, in which indebtedness, investment, population growth and exports represented independent variables, While the natural logarithm of GDP at constant prices of the national currency represents economic growth. Results show that the government debt has a negative effect on economic growth in morocco, due to government activity struggles private sector in order to finance and investment opportunities. The effect of population growth was also significant, with a negative sign in the case of Morocco, while the other variables in the model did not show any significant relationship Also, For Tunisia, the estimation of the regression function did not show a significant effect of the indebtedness in the growth. The investment variable was significant in relation to the economic growth, which carried a positive correlation with the economic theory. Population growth and exports were not statistically significant.Keywords: Government debt, Economic growth, Investment.