Public Debt and Economic Growth in Tunisia: An ARDL Analysis

This paper examines the effect of public debt on economic growth in Tunisia over the period 1986-2024. Using an autoregressive distributed lag (ARDL) model, the analysis distinguishes between short-run dynamics and long-run relationships while controlling for inflation, trade openness, population growth, investment and the budget balance. The bounds testing approach indicates the existence of a long-run relationship among the variables. The results suggest that public debt is negatively associated with economic growth in the long run. In the short run, the immediate coefficient of public debt is positive but statistically insignificant, whereas negative effects appear with a delay. These findings are consistent with debt-overhang and crowding-out arguments, but they must be interpreted cautiously because the diagnostic tests reveal residual autocorrelation. The study therefore highlights the importance of debt sustainability, the productive allocation of borrowed resources and the strengthening of fiscal governance in Tunisia.