Analyzing the Short-term and Long-term Effects of Debt on Growth and How to Formulate Policies in the Face of the Epidemic by setting dummy variable model

摘要

This paper focuses on the effects between debt and growth in short term and long term, in order to guide the right direction for the introduction of relevant policies. This paper established a model by set dummy variable larger or less than 90, then we calculated the intercept of different spans of years between debt and GDP to verify whether 90 is the threshold or not. Since we get intercept It is concluded that the higher the debt, the slower the growth in the short-term, and the long-term effect will be neutralized. When the government or central bank decides to use debts to solve the crisis, it can better weigh the short-term and long-term pros and cons and introduce more effective policies.