The Causality between Debt and Economic Growth Evidence from Jordan

The study examine Granger Causality and the relationship between debt and economic growth in Jordan economy over the period (1990-2012), using Granger Causality test, multiple regression, The empirical results show there is causality relationship running from economic growth (GDP) to debt (DEBT), also that there is a positive relationship between debt and economic growth. Further more the results concluded that public debt and economic growth have long run relationship, and they are positively related, Therefore, the policy implication of these results is that Jordan government should source for loans within the economy so that when the principal and interest on the loans are paying back, it will serve as a crowd-in effect which in turn further accelerates economic activities in the country.