Saving less when there is more foreign lending? Foreign debt and savings in developing countries
AbstractAlthough literature has given considerable attention to the effects of foreign debt on growth, we still know little about its effects on the internal potential for capital formation. Literature suggests a number of channels through which the availability of foreign financing could affect domestic savings. We test empirically this relationship using data for Sub-Saharan Africa and Latin America and the Caribbean over 1975-2004. Controlling for endogeneity, we find that foreign debt adversely influences domestic savings especially in the long run. The results are not susceptible to the choice of countries, although few outliers should be noted.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.
Volume (Year): 13 (2010)
Issue (Month): 3 ()
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Other versions of this item:
- Luke Emeka Okafor & Joanna Tyrowicz, 2010. "Saving less when there is more foreign lending? Foreign debt and savings in developing countries," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(3), pages 213-223.
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O42 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
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