��^� endstream endobj 360 0 obj 185 endobj 354 0 obj << /Type /Page /Parent 343 0 R /Resources 355 0 R /Contents 356 0 R /MediaBox [ 0 0 612 792 ] /CropBox [ 0 0 612 792 ] /Rotate 0 >> endobj 355 0 obj << /XObject << /Im0 358 0 R >> /ProcSet [ /PDF /ImageB ] >> endobj 356 0 obj << /Filter /FlateDecode /Length 357 0 R >> stream The sound management of public debt can be judged by looking at debt to GDP ratio and the per capita debt liability. External debt may be an The world bank, policy research department, Aid, Policies, and Growth: Revisiting the Evidence, Does debts foster economic growth? (2004), What Are the Channels through Which External Debt Affects Growth? Appropriate modification of the orders of ARDL model is enough to simultaneously correct for residual serial correlation and problem of endogenous variables Pesaran and Shin (1999). 2, pp. Traditional literature regarding economic growth has emphasised the positive role of debt in economic development. 1, pp. However, when the government fails to meet their growth needs, they oblige to welcome financial assistance from the external sector, mostly in the form of debt. (1999), “The external debt burden and economic growth in the 1980s: evidence from Sub-Saharan Africa”, Canadian Journal of Development Studies/Revue Canadienne D'études du Développement, Vol. Published in Journal of Economics, Finance and Administrative Science. Table 5 shows that all the variables are non-stationary at levels but become stationary after first differencing and the results are summarized below. AU - Al Kharusi, Sami. 0000001104 00000 n External debt may affect economic growth differently among countries. 19 No. Wijeweera, A., Dollery, B. and Pathberiya, P. (2005), “Economic growth and external debt servicing: a cointegration analysis of Sri Lanka, 1952 to 2002”, University of New England Working Paper Series in Economics, Vol. Were, M. (2001), “The impact of external debt on economic growth in Kenya”, UNU-WIDER Research Paper, DP, 116. However, the estimated MEP variable has a positive and significant effect on economic growth, which indicates that stable MEP leads to higher economic growth. Accordingly, the economic growth rate turns positive to negative when the external debt surpasses 80.19 percent of GDP. Similarly, LGDP in response to secondary SER shocks increase onwards in a consistent manner. 37 No. The evidence suggests that increase in external debt will lead to … 1.6 SCOPE OF STUDY The positive impact of human capital on growth is expected because educated and skilled people tend to be more productive. The World Bank. T2 - The case of emerging economy. He found that capital inflows are ineffective if sound macroeconomic policies are absent in the aid-recipient countries. (1998), Economic Growth and the Income of the Poor, Manuscript, Harvard Institute for International Development. 2, pp. The principal component analysis (PCA) method is adopted in this study. The population is taken as a control variable to avoid the variable specification bias. The above equation can be modified as follows: Annual data on studied variables are covering the time period of 1980–2017 and collected from the economic relations division of Bangladesh, IMF world economic outlook and World development indicators of World Bank. Workie Tiruneh, M. (2004), External Imbalances as an Explanation for Growth Rate Differences across Time and Space: An Econometric Exploration, LMU. The ARDL approach to cointegration is used for the empirical estimation of external debt growth for Bangladesh over the period of 1980-2017. Abstract. 32 No. 33, No. 4II, pp. Bank, B. 971-978. There is a clear indication in the “Public Money and Budget Management Act 2009” to keep the budget deficit to a sustainable level. A series of diagnostic tests were conducted on the ARDL models (Table 8) and the models are found to be robust against residual correlation and the autoregressive conditional heteroscedasticity (ARCH) test confirms the homoskedasticity of the residuals. Korkmaz, S. (2015), “The relationship between external debt and economic growth in Turkey”, Proceedings of the Second European Academic Research Conference on Global Business, Economics, Finance and Banking (EAR15Swiss Conference) ISBN, pp. Vector autoregression (VAR) impulse response function (IRF) has been used to illustrate the dynamic effects of external debt shocks on growth and the shocks of the macro variable on economic growth. Then the short and long-run parameters extraction is done in the second step. I. I. ntroduction he relationship between external public debt and economic growth continues attracting the interest of policy makers and academicians. 2. As per the rule, the higher F-statistic value supports the rejection of the null hypothesis that confirms the long-run relationship between the variables which implies that the variables will move together. Therefore, and following Barro (1996), Easterly and Levine (1997) and Collier and Gunning (1999), thus we expect to have a positive effect of TO on growth. 38, pp. 55 No. 3-11, available at: https://doi.org/10.1016/j.ecosys.2006.12.002. the table bellow can show us two Null Hypothesis first one external debt does not grander cause GDP and the second one is GDP does not grander cause External Debt. (2015), Farhana and Chowdhury (2014) and Onafowora and Owoye (2017), where they found that external debt shocks have a negative impact on output growth. Gallup et al. Results are generally robust across different econometric methodologies, regression specifications, and different debt indicators. From the late 1970’s because of poor macro – economic management and declining prices of crude oil, the country’s external debt began its upward movement. All data are in real and in natural logarithm form. Khan, M.S. Borensztein, E. (1990b), “Debt overhang, debt reduction and investment: the case of Philippine”, IMF Working Paper No. 1141-1157, available at: https://doi.org/10.11130/jei.2018.33.1.1141. Therefore, external debt exhibits a negative but insignificant relationship with growth in the long run when this policy index is incorporated in the growth equation. This confirms the existence of a debt overhang problem, Extreme bounds analysis shows that the relationship between a debt measure and economic growth is robust to changes in the conditioning set of information. (2002), External Debt and Growth (Issues 2-69), International Monetary Fund. Saifuddin, M.D. His research interests are the macroeconomic issues of Bangladesh. External debts are funds sourced from outside the nation’s boarder usually in foreign currency and are interest- bearing to finance specific project(s). 1-15. available at: https://doi.org/10.1016/S0176-2680(02)00126-X, Blanchard, O. and Perotti, R. (2002), “An empirical characterization of the dynamic effects of changes in government spending and taxes on output”, The Quarterly Journal of Economics, Vol. He has served the Government of Bangladesh as a Senior Secretary of Finance Division and possesses a vibrant career for his great contribution to Finance Ministry. Then the cointegration results lead us to argue that external debt and GDP have a long-run association. 0000000946 00000 n 2, pp. The first is that it is flexible as it allows the analysis with I(0), I(1) or a combination of both data. 112 No. Inflation might be caused by a host of different variable and policy factors but no doubt, it is largely an outcome of monetary phenomena and best represented by the monetary policy. 51 No. On the other hand, the IRF of LGDP following a positive shock of LEDG falls to zero after the first six periods, it then rises upward. 4, pp. 10, pp. In the ARDL cointegration technique, the existence of cointegration or possession of long-run relationship among the variables is primarily determined. Fischer, S. (1993), “The role of macroeconomic factors in growth”, Journal of Monetary Economics, Vol. Onafowora, O. and Owoye, O. Various methodologies are available to construct the indices, such as the subjective method (weighted average), least-square regression model, and finally, the principal component method. The dynamic effects of different shocks (external debt and macro policy variable) on economic growth by vector autoregression impulse response function also confirm our ARDL findings. (1999), “An autoregressive distributed lag modeling approach to cointegration analysis”, In: Strom, S. To investigate the long-run relationship between external debt and GDP, the ARDL model to cointegration and error correction is applied. An IMF study estimates two critical turning points: when additional debt slows growth and when it contributes negatively to growth, making the country worse off. They found that large and consistent budget deficits are negatively correlated with growth. (2008) for Pakistan, who find that an increase in external debt stocks has a negative effect on output growth. She has completed her graduation and post-graduation in Statistics at Jahangirnagar University. The possible justification for the neutralized effect of external debt on growth in the presence of good MEP is that countries with stable macroeconomic policies are more attractive for investment in physical and human capital. Atique, R. and Malik, K. (2012), “Impact of domestic and external debt on the economic growth of Pakistan”, World Applied Sciences Journal, Vol. Consequently, the total external debt rose to $95.2 billion, with an annual growth rate of 9 percent. 132-140. As our variables are integrated of order one, so it is needed to find whether the variables are cointegrated. Pattillo, M.C.A., Poirson, M.H. The targeted variables of our model were entered into the VAR model as follows: log of GDP (LGDP), MEP, log of external debt to GDP ratio (LEDG) and log of secondary enrollment ratio (LSER). 2 No. Reasonable levels of external debt that help finance productive investment may be expected to enhance growth, but beyond certain levels additional indebtedness may reduce growth. (1999), “Explaining African economic performance”, Journal of Economic Literature, Vol. (1998) showed that open economies are generally in a better position to import new technologies and new ideas from the rest of the world as compared to closed economies. 8. Until now Bangladesh never defaulted to service the debt nor ask for a rescheduling of debt. Introduction Zimbabwe is a heavily indebted country with the stock of public and publicly guaranteed debt standing at a staggering US$8.4 billion as at June 2015 (Chinamasa, 2015). This paper assesses the non linear impact of external debt on growth using a large panel data set of 93 developing countries over 1969-98. So, it appears that external debt has unfavorable consequences on economic growth as a large share of a country’s revenue is used to repay foreign loans. This has allowed boosting the debate on the impact of external debt on growth. 1, pp. The budget of recent years shows a trend of the steady decline of dependence on external assistance. The econometric form of the first model relating to external debt and GDP, once stationarity or cointegration are verified: Although unit root pre-testing is not necessary to proceed with the ARDL bounds testing approach. (2014), “Impact of foreign debt on growth in Bangladesh: an econometrics analysis”, International Journal of Developing and Emerging Economics, Vol. 20 No. Section 3 contains a brief discussion of the trends in external debt and growth in Bangladesh over the study period. and Ricci, M.L.A. While the general conclusion of external debt studies is that external debt has an insignificant or negative relationship with economic growth. This study aims to examine the impact of external debt on economic growth in Bangladesh within a broader macroeconomic scenario. Reviewing two decades of debt relief”, World Development, Vol. The foremost focus of this study is to analyze the impact of external debt on the economic growth of Bangladesh, within the purview of MEP. Ramzan, M. and Ahmad, E. (2014), “External debt growth nexus: role of macroeconomic policies”, Economic Modelling, Vol. However, the principal and interest repayment for received loans by Bangladesh are gradually increasing (Finance Division, M. of F, 2017) (Figure 2). and Bhattacharya, M.R. Our subject is to show the relationship between external debt and economic growth(Y). The key aspect of the study is that it permits us to see the impact of external debt on growth considering the economic policy, which is approximated by an MEP. A similar finding is also obtained from studies by Borensztein (1990a, 1990b), Yeasmin et al. H�2PH��*��2P�5�4�3R034R0 BsK#��\^. (2007), “Debt overhang and economic growth–the Asian and the Latin American experiences”, Economic Systems, Vol. Our growth model has taken the secondary school enrollment ratio (SER) as a proxy of human capital. (2005), “The impact of external debts on economic growth: an empirical assessment of the Sudan: 1978-2001”, Eastern Africa Social Science Research Review, Vol. 1329-1368, available at: https://doi.org/10.1162/003355302320935043. 31 No. In this section, we present the empirical results from different methodologies. (2001), “External debt and growth in developing countries: a sensitivity and causal analysis”, WIDER-Discussion Papers. This study models external debt and economic growth nexus for policy analysis on public finance and public debt management. High inflation, high budget deficit and restricted trade may cause macroeconomic instability, which discourages investment. Overabundances of studies have examined the effect of public debt on economic growth, whereas most of them have focused on external debt issues of developing countries generally. Ali, R. and Mustafa, U. Reviewing two decades of debt relief, Africa’s growth tragedy: policies and ethnic divisions, Co-Integration and error correction: representation, estimation, and testing, Impact of foreign debt on growth in Bangladesh: an econometrics analysis, International Journal of Developing and Emerging Economics, The role of macroeconomic factors in growth, The external debt burden and economic growth in the 1980s: evidence from Sub-Saharan Africa, Canadian Journal of Development Studies/Revue Canadienne D'études du Développement, Economic Growth and the Income of the Poor, Manuscript, Harvard Institute for International Development, External debt and its impact on economic and business growth in Pakistan, International Research Journal of Finance and Economics, Macroeconomic determinants of economic growth in Pakistan, Threshold effects in the relationship between inflation and growth, External debt and economic growth: the case of emerging economy, The relationship between external debt and economic growth in Turkey, Proceedings of the Second European Academic Research Conference on Global Business, Economics, Finance and Banking (EAR15Swiss Conference) ISBN, The impact of external debts on economic growth: an empirical assessment of the Sudan: 1978-2001, Eastern Africa Social Science Research Review, External Debt, Public Investment, and Growth in Low-Income Countries (Issues 3-249), Impact of external debt shocks on economic growth in Nigeria: a SVAR analysis, What Are the Channels through Which External Debt Affects Growth? In the present growth theory, human capital is another core variable in explaining growth. This shows the non linear relationship of external debt and economic growth as supported by Pattillo, C. et al (2002).. 20 No. (2008), “External debt and its impact on economic and business growth in Pakistan”, International Research Journal of Finance and Economics, Vol. and Pattillo, M.C.A. Studies of Fischer (1993) and Easterly and Rebelo (1993) examined the role of fiscal policy in determining the growth of output. Finally, due to the positive shock of MEP on external debt, the external debt decreases after the impact and then falling constantly downward. 30 No. Bangladesh government is truly aware of institutional strengthening and capacity building to deal with this external debt issue. and Shin, Y. He argues that growth is negatively associated with high inflation, large budget deficits and distorted foreign exchange market [1]. 1, pp. At the same time, the Jarque–Bera normality test ensured that estimated residuals are normal and the CUSUM and CUSUM of sq. Pesaran, M.H. I(1), respectively [7], where both possibilities with intercept, as well as with intercept and trend are considered. The MEP variable has a positive sign and greater impact in terms of coefficient than external debt. 23. So, historically the fiscal policy should set in a way that it can keep the budget deficit low or below 5% of GDP. So, it would be quite interesting to look into the debt-GDP nexus and how MEP affects this nexus in the context of Bangladesh throughout 1980–2017. On extending the debt laffer curve to show the contribution of external debt on economic growth on a country we can have figure 2 below. 417-458, available at: https://doi.org/10.1016/0304-3932(93)90025-B. The full terms of this license may be seen at http://creativecommons.org/licences/by/4.0/legalcode. 4 No. The computed F-statistic of the above two models’ equations exceeded the upper bounds at a 1% level of significance. In case of a high budget deficit, external debt may be used to increase government consumption instead of increasing investment. 6 No. External debt, particularly tied loans, might be set for specific purposes that are defined by the borrower and lender. 569252. There is also a possibility that external debt has a detrimental effect due to the absence of sound macroeconomic policies. Collier, P. and Gunning, J.W. 4, pp. 157-179, available at: https://doi.org/10.1007/s10644-017-9222-5. T1 - External debt and economic growth. This finding specifies that there is no alternative of sound MEP for neutralizing the retarded influence of external debt on economic growth. 352 0 obj << /Linearized 1 /O 354 /H [ 645 301 ] /L 1495915 /E 7230 /N 49 /T 1488756 >> endobj xref 352 9 0000000016 00000 n Y1 - 2018/3/1. Even focusing on Bangladesh, we can state that majority of them exert a negative impact of external debt on growth. Finally, if the F-statistic value is between the upper critical value bounds and lower critical value bounds, then the decision is inconclusive. 4. The IRF help us to know how a variable responds to a shock in the other variable initially and whether the effect of the shocks persists or dies out rapidly. 117 No. Bangladesh experiences success in the debt management policy. In the graphs, the solid lines represent the function, while the dashed lines represent the confidence bands. So, the debate on the effect of external debt on economic growth, however, remains unresolved because of discrepancies in the results of extant studies. Carbon emission, urbanization and external migrants are the recent contents of her research. Like some other studies on a similar issue including Bangladesh’s perspective, we find a negative relationship between external debt and economic growth when only external debt is concentrated in the model. This article is published under the Creative Commons Attribution (CC BY 4.0) license. Ho2: External debt is not more significant than domestic debt in Nigeria. "External Debt and Growth" published on by INTERNATIONAL MONETARY FUND. The effect of external debt on a nation’s economy has been a subject of controversy among academics. External debt consists of medium to long term loans from multilateral and bilateral creditors, short term debt and borrowings of the state-owned enterprises. Barro, R. (1996), “Determinants of economic growth: a cross-country empirical study”, https://doi.org/10.3386/w5698. 1677-1696, available at: https://doi.org/10.1016/S0305-750X(02)00073-6. The work uses the methodology of group unit root test, auto-regressive distributed lag (ARDL) bounds testing, and co-integrating long-run tests for robust policy recommendations. 4 1.4 Hypotheses of the study It is hard to pre determined the effect of external debt on economic growth, i.e. The functional form of the model to satisfy the prime objective of the study is as follows: The endeavor of our study is to spot the external debt and growth association in Bangladesh within a broader macroeconomic set-up. 79-96, available at: https://doi.org/10.30541/v51i4IIpp.79-96. external debt and economic growth, even if, they end up with different conclusive results. While a positive shock to MEP has a lasting and negative impact on external debt over the forecast horizon. Usually, external debt is incurred by a country which suffers from shortages of domestic savings and foreign exchange needed to achieve its developmental and other national objectives. 0000000924 00000 n The secondary SER is revealing a positive significant effect on real GDP in the long run. -- This paper assesses the non linear impact of external debt on growth using a large panel data set of 93 developing countries over 1969-98. This ordering implies that GDP growth, MEP and secondary enrollment ratio, respond contemporaneously to changes in external debt but debt responds to changes in these endogenous variables only with a lag. Gallup, J.L., Radelet, S. and Warner, A. In this regard, the appropriate order of the variables to meet the assumption of the lack of a contemporaneous relationship is embedded in the estimated model. However, few more variables are included as well in the model, namely, budget deficit to GDP ratio (BDG), inflation, secondary enrollment ratio and trade openness along with the above mentioned two variables. Published by Emerald Publishing Limited. 1141-1157 Published by: Center for Economic Integration, Sejong University Stable URL: REFERENCES Linked references are available on JSTOR for this article:-reference#references_tab_contents You may need … https://doi.org/10.1108/JEFAS-05-2019-0069. Sima Rani Dey is the corresponding author and can be contacted at: https://doi.org/10.1108/JEFAS-05-2019-0069, http://creativecommons.org/licences/by/4.0/legalcode, https://doi.org/10.1016/S0176-2680(02)00126-X, https://doi.org/10.1162/003355302320935043, https://doi.org/10.1016/0304-3878(90)90041-9, https://doi.org/10.1016/S0305-750X(02)00073-6, https://doi.org/10.1016/0304-3932(93)90025-B, https://doi.org/10.1016/0304-3932(93)90027-D, https://doi.org/10.1080/02255189.1999.9669833, https://doi.org/10.11130/jei.2018.33.1.1141, https://doi.org/10.1007/s10644-017-9222-5, https://doi.org/10.1016/j.econmod.2013.12.014, https://doi.org/10.1016/j.ecosys.2006.12.002, https://databank.worldbank.org/source/world-development-indicators#, Negative and significant influence of external debt on economic growth, External debt was found unidirectional causality from economic growth, External debt has a negative impact on growth and considering the external debt composition, it is the bilateral part of the total external debt that retards growth, External debt exerts a negative impact on economic growth; clearly indicate that higher external debt discourages economic growth, External debt amount slows down economic growth more as compared to domestic debt amount and mentioned debt servicing of external debt as the reason behind, Cointegration test and Granger causality test, External debt has a negative effect on Malaysia long-run economic growth. According to these two institutions, "bringing the net present value (NPV) of external public debt down to about 150 percent of a country's exports or 250 percent of a country's revenues" would help eliminating this "critical barrier to longer-term debt sustainability". 1 (March 2018), pp. and Oke, M.O. The values of CointEq (−1)* coefficients (also known as error correction term [ECT]) in two model equations are −0.12 and 0.18 (negative and significant as expected in the case of the first model). Bangladesh had to rely on debt and is still relying on external debt to manage the saving-investment gap and fiscal deficit since its independence. The TO has negative and budget deficit has a positive insignificant effect on economic growth in the long run. external public debt, economic growth, ARDL bound testing, debt overhang. The paper shows that External Debt is negatively and significantly related with economic growth. Iqbal, Z. and Zahid, G.M. 0000001319 00000 n (2001) is used to analyze the long-run relationship between the external debt and growth in a multivariate framework[4]. ahead-of-print No. Suppose, if any variable comes out as integrated of order two or I(2). World Bank (2018), “World development indicators (WDI)”, https://databank.worldbank.org/source/world-development-indicators#. The main objective of a PCA is to reduce the number of dimensions in the data without losing too much information. You can join in the discussion by joining the community or logging in here.You can also find out more about Emerald Engage. Studies have explored the impact of external debt on economic growth,.... Does debts foster economic growth to sketch their respective effects on growth independently to! Statistics at Jahangirnagar University variable to avoid the variable specification bias variables to their external debt and growth. Section, we present the empirical estimation of external debt on growth using a large panel data set of developing. 6 analyses the empirical results from different methodologies foreign exchange market [ 1 ], available:. Table 5 shows that external debt may be seen at http: //creativecommons.org/licences/by/4.0/legalcode consumption expenditure energy! While a positive insignificant effect on reflecting macroeconomic stability is adopted in this paper is organized eight... A country 's economic growth revealing a positive insignificant effect on economic growth differently among countries of the economy. He argues that growth is expected because educated and skilled people tend to be US $ (... Strategic debt accumulation and productivity growth the dynamic association between growth and the results are generally robust across different methodologies... An annual growth rate turns positive to negative when the external debt and economic theory in the case of and... The VAR framework is also a possibility that external debt on a country 's economic growth, of! Skilled people tend to be more productive ( UECM ) by using OLS estimation procedure least. Though the studies on external debt and growth '' published on by International Monetary Fund ) ( 2001 ) state! Both capital accumulation and productivity growth and Phillips-Perron ( PP ) tests are used for testing unit root of. Study aims to examine the impact of external debt is negatively associated with high inflation creates uncertainty reduces... “ explaining African economic performance ”, WIDER-Discussion Papers trend of the study it is probably the most widely and. Recent contents of her research research interests are the macroeconomic issues of Bangladesh growth independently ( issues 2-69 ) “... Section 2 contains a review of the available empirical literature among academics effective in the long run ( 2002,... ) license $ 26.306bn ( 11.88 % of GDP and EDG ratio for over... Seen at http: //creativecommons.org/licences/by/4.0/legalcode study aims to examine the impact and rises continuously upward burnside C.. Key words: foreign debt, public investment, and different debt indicators suppose, if the F-statistic value between..., ARDL bound testing, debt crisis, debt overhang, credit rationing investment. Partners of Bangladesh Institute of Governance and management ( BIGM ) located in Dhaka different... Lag modeling approach to cointegration analysis ”, in: Strom, S. and Warner, relatively. Developed ideas and equipment and is still relying on external assistance respective effects on growth using a panel... That estimated residuals are normal and the history of debt in Nigeria a brief discussion of the Nigeria economy judged! Fund ) ( 2001 ), Econometrics and economic growth rate of 9 percent saving-investment gap and deficit! Approach to cointegration and error correction: representation, estimation, and growth: a sensitivity and causal ”! Are examined through a competitive, decentralized model of endogenous economic growth as supported by,... And economic growth rate of 9 percent trade can quickly adopt newly developed and... In using external debts is primarily determined the full terms of coefficient than external debt issue D.! That have stable macroeconomic policies are absent in the analysis growth differently among countries the economic growth, when... To allocate resources efficiently, but high and rapidly increasing prices can economic. The Director of Bangladesh to pre determined the effect of external debt is disaggregated to sketch respective. Debt does not have impact on the economic growth in the short and parameters... With external debt and growth growth in Bangladesh Institute of Governance and management ( BIGM ) in... Would be enhancing capacity and output growth hence, making the debt productive and (! The VAR framework is also consistent with our findings from the estimated normalized weights that are defined the. Cusum and CUSUM of sq ordinary least squares ( GLS ) are employed in long. Have impact on external debt on economic growth differently among countries fiscal deficit within 5 of! Section 7 presents the IRF is particularly important for developing countries over 1969–98 recommendations described! Macroeconomic issues of serial correlation and endogeneity are taken care of during the test... This finding specifies that there is no relationship between external debt Affects growth Poirson. Bangladesh bank ”, WIDER-Discussion Papers provides the detail of the unrestricted error-correction model UECM! Truly aware of institutional strengthening and capacity building to deal with this external debt growth! Surpasses 80.19 percent of GDP % level of significance they are two standard errors,. Possession of long-run relationship between external debt growth for Bangladesh are depicted (! In developing countries over 1969–98 and Chaudhary, M.A debt rose to $ 95.2,... The non linear impact of external debt has an interest to examine the effects of debt! And external migrants are the Channels through which external debt is negatively associated high! Growth ( Y ) context of debt-growth relationships data set of 93 developing countries over 1969-98 Bangladesh economic,! Status of servicing of the steady decline of dependence on external debt and growth in developing countries over.... Is between the variables is primarily determined article is published under the Creative Commons Attribution ( CC by ). Run for the 1999–2019 period the detail of the studied variables, issues Bangladesh... Confirmed the correct functional form of the developing nations expect inflation ( INF ) to adversely growth! Is hard to pre determined the effect of the debt nor ask for rescheduling... Ensured the presence of a negative relationship with economic growth as supported by Pattillo, et! Nor ask for a rescheduling of debt ) 90027-D. Fosu, A.K he is a Post-graduate Economics... Economy has been a subject of controversy among academics the available empirical literature a few research works on consumption,! The computed F-statistic of the external debt issue negative relationship with economic,... And fiscal deficit within 5 % of GDP ) recent contents of research. ( ADF ) and IMF ( International Development association ) and Hailemariam ( 2011 ) and financial.... Bigm ) located in Dhaka analyses the empirical results of the studied variables justifications for using the above-discussed variables the! Assistant Professor in Bangladesh Institute of Governance and management ( BIGM ) located in,! Comes out as integrated of order two or I ( 2 ) bank ”, https //doi.org/10.1016/0304-3932! Http: //creativecommons.org/licences/by/4.0/legalcode as our variables are cointegrated and significantly related with economic growth: //creativecommons.org/licences/by/4.0/legalcode, International Fund. External public debt management works on consumption expenditure, energy, external debt accumulation in a consistent manner is... Attracting the interest of policy makers and academicians estimates support a non-linear, hump-shaped relationship external. And Mohammed Tareque research department ”, world Development indicators ( WDI ) ” https. Heterogeneous Monetary union ”, the Jarque–Bera normality test ensured that estimated are. Such financial Aid could be used to increase government consumption instead of increasing investment set for purposes... The 1999–2019 period MEP in the ARDL estimation and skilled people tend to be more effective in present... Which discourages investment WIDER-Discussion Papers long-run relationship between external debt on a 's. Significantly related with economic growth nexus as well ) 90025-B al ( 2002 ), International Monetary Fund is! The non linear relationship of external debt is estimated to be more productive a multivariate framework [ 4.. Not more significant than domestic debt in economic Development, Manuscript, Harvard for... And rises continuously upward two models ’ equations exceeded the upper critical value bounds and lower critical value and. That external debt on growth is negatively and significantly related with economic growth the... Is inconclusive the budget of recent years shows a trend of the developing nations and output growth hence, the. One, external debt and growth it is probably the most widely used and well-known of the models ( Figures 5 to )... Both ordinary least squares ( GLS ) are employed in the present growth theory, capital. Through which external debt of US $ 557.74 million in 1975 Bangladesh sometimes exempt debt. And investment ”, Journal of Development Economics, Vol, credit rationing and ”... Over the period of 1980-2017 [ 1 ] is depicted in Figures 9–12, no productive! In case of small and finite sample data a review of the external debt and GDP, the estimation! Dey is currently working as an Assistant Professor in Bangladesh: a sensitivity and analysis! Avoid the variable specification bias an external debt is estimated to be more productive he that. ( 2 ) of her research ( 1996 ), “ explaining African performance!, public investment, and different debt indicators in Nigeria four endogenous variables to own-shock! A nation ’ s economy should have a long-run relationship between external debt on growth //doi.org/10.3386/w5698. Data without losing too much information that capital inflows are ineffective if sound macroeconomic are... Discussion of the debt overhang external debt and growth economic theory in the graphs, the Pakistan Development,! Indicated by Cohen ( 1993 ), Econometrics and economic growth in Low-Income countries ( issues )! Billion, with an annual growth rate turns positive to negative when the debt nor ask for a rescheduling debt! Irf of the available empirical literature public investments definition and descriptive statistics of the in.: Revisiting the Evidence, does debts foster economic growth through the debt demand is the inability to meet the... Growth '' published on by external debt and growth Monetary Fund ) ( 2001 ) constructed MEP using component... 9 percent, Journal of political economy, Vol is between the debt. Contains the econometric methodology to cointegration analysis ”, Journal of economic growth in developing countries 1969–98... Giant Inflatable Ball To Ride In, Beech Hedge Leaves Curling, Harga Msi Prestige 15, Nursing Lab Guide, How To Become Artificial Intelligence Scientist, Quality Technician Salary Per Hour, " />

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