EXTERNAL PUBLIC DEBT AND ECONOMIC GROWTH IN UZBEKISTAN
Keywords:
economic growth, cointegration, debt overhang, external public debt, error correction model.Abstract
This study investigates the relationship between external debt and economic growth in the Uzbekistan during the period 2010–2020. Two-step Engle and Granger Cointegration method is employed to determine the cointegration relationship between external debt and GDP growth. Our findings show that there is a negative significant relationship between external debt and economic growth. We can also observe that a 1% increase in external debt will lead to a 24% decrease in GDP growth. Also the results of ECM model suggests that if economic shocks and periodic downturn occur in GDP as a result of external debt, then 86.0% of disequilibrium will return to its equilibrium in each subsequent short period. This suggests that GDP growth may return to its equilibrium after a period of 1.17 (1/86) from debt crisis and shocks.
References
Ajayi, L. B., & Oke, M. O. (2012). Effect of external debt on economic growth and development of Nigeria. International journal of business and social science, 3(12), 297-304.
Clements, B., Bhattacharya, R., & Nguyen, T. Q. (2003). External debt, public investment, and growth in low-income countries.
Cordella, T., Ricci, L. A., & Ruiz-Arranz, M. (2010). Debt overhang or debt irrelevance?. IMF Staff Papers, 57(1), 1-24.
Cunningham, R.T. (1993). The Effects of Debt Burden on Economic Growth in Heavily Indebted Nations. Journal of Economic Development, 18(1): 115-126.
Dickey, David A. and Wayne A. Fuller (1981). “Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root”. Econometrica49 (4): 1
Elmendorf, D. W., & Mankiw, N. G. (1999). Government debt. Handbook of macroeconomics, 1, 1615-1669.
Engle, Robert F. and Clive W. J. Granger (1987). “Cointegration and Error Correction: Representation, Estimation, and Testing”. Econometrica55: 251-276
Faraji, K., & Makame, S. (2013). Impact of budget deficit on economic performance: A Case Study of Tanzania. Advances in Management and Applied Economics, 3(4), 59-82.
Imbs, J. M., & Rancière, R. G. (2005). The overhang hangover.
Lakshmanasamy (2021). THE CAUSAL RELATIONSHIP BETWEEN EXTERNAL DEBT AND ECONOMIC GROWTH IN INDIA: ERROR CORRECTION MECHANISM ESTIMATION.
Pattillo, C., & Ricci, L. A. (2011). External debt and growth. Review of Economics and Institutions, 2(3), 30.
Shah, M., & Pervin, S. (2012). External public debt and economic growth: empirical evidence from Bangladesh, 1974 to 2010. Academic Research International, 3(2).
Sulaiman, L. A., & Azeez, B. A. (2012). Effect of external debt on economic growth of Nigeria. Journal of Economics and sustainable development, 3(8), 71-79.
Wijeweera, A., Dollery, B. E., & Pathberiya, P. (2007). Economic growth and external debt servicing: a cointegration analysis for the case of Sri Lanka. Indian Journal of Economics & Business.
Woo, J., & Kumar, M. S. (2015). Public debt and growth. Economica, 82(328), 705-739.
Zouhaier, H., & Fatma, M. (2014). Debt and economic growth. International Journal of Economics and Financial Issues, 4(2), 440-448.
