IDEAS home Printed from https://ideas.repec.org/a/eme/jcefts/v5y2012i2p157-167.html
   My bibliography  Save this article

Foreign debt, economic growth and economic crisis

Author

Listed:
  • Xuan Changyong
  • Sun Jun
  • Yan Chen

Abstract

Purpose - The purpose of this paper is to examine the relationship between foreign debt, economic growth and economic crisis. Design/methodology/approach - This paper constructs a Ramsey‐Cass‐Koopmans model theoretically and examines empirically the relationship between foreign debt, economic growth and economic crisis using US data over the period of 2003 and 2008. Findings - The paper finds that if the debt transformation rate is low when the debt ratio rises over a certain point; economic growth will be hindered, and may even trigger economic crisis. In contrast, high debt transformation rate may facilitate economic growth. However, the paper also shows that when the debt ratio exceeds a certain point, the debt will become a barrier to economic growth. These results will be of interest to policy makers not only in developed countries but also in emerging economies such as China. Originality/value - These findings suggest that the relationship between debt, economic growth and economic crisis is not uniform, but depends on debt transformation rate.

Suggested Citation

  • Xuan Changyong & Sun Jun & Yan Chen, 2012. "Foreign debt, economic growth and economic crisis," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing Limited, vol. 5(2), pages 157-167, June.
    • Handle: RePEc:eme:jcefts:v:5:y:2012:i:2:p:157-167
    DOI: 10.1108/17544401211233534
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/17544401211233534/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/17544401211233534/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/17544401211233534?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jcefts:v:5:y:2012:i:2:p:157-167. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.