IDEAS home Printed from https://ideas.repec.org/p/anp/en2009/108.html
   My bibliography  Save this paper

Capital Accumulation,External Indebtedness and Macroeconomic Performance of EmergingCountries

Author

Listed:
  • Felissa Silva de Sousa Marques
  • José Luis Oreiro
  • MarcosRocha

Abstract

This paper aims at presenting a nonlinear post Keynesian growth model to evaluate at the theoretical and empirical levels the relationship between external indebtedness and economic growth in emerging countries. To this end, a post Keynesian endogenous growth model is presented, in which: (1) the desired rate of capital accumulation is assumed to be a nonlinear function of external indebtedness as a share of capital stock; (2) an endogenous country risk premium is assumed to be an increasing (linear) function of external indebtedness (as a share of capital stock); (3) there is a fixed exchange rate regime and perfect capital mobility in the sense of Mundell and Fleming. The main theoretical result of the model is the existence of two long-run equilibrium positions, one of which has a high level of external indebtedness (as a ratio of capital stock) and a low profit rate and the other has a low level of external indebtedness and a high profit rate. This means that "excessive" external indebtedness can result in stagnant growth due to its negative effect on the rate of profit. To test the effects of external indebtedness on the rate of economic growth in emerging economies, a dynamic panel is estimated to evaluate whether external debt has an effective negative influence on economic growth in emerging countries. An empirical test of demand-led growth equations with a dynamic panel for fifty-five emerging countries confirms the potential negative effects of external debt on long-term growth rates in the sample countries.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Felissa Silva de Sousa Marques & José Luis Oreiro & MarcosRocha, 2011. "Capital Accumulation,External Indebtedness and Macroeconomic Performance of EmergingCountries," Anais do XXXVII Encontro Nacional de Economia [Proceedings of the 37th Brazilian Economics Meeting] 108, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    • Handle: RePEc:anp:en2009:108
    as

    Download full text from publisher

    File URL: http://www.anpec.org.br/encontro2009/inscricao.on/arquivos/000-b3bd50a0263d5a4001e52e01368523ea.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
    2. Paul Davidson, 2002. "Financial Markets, Money and the Real World," Books, Edward Elgar Publishing, number 2467.
    3. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-115, March.
    4. Paulo Gala, 2008. "Real exchange rate levels and economic development: theoretical analysis and econometric evidence," Cambridge Journal of Economics, Oxford University Press, vol. 32(2), pages 273-288, March.
    5. Anonymous, 1962. "International Monetary Fund," International Organization, Cambridge University Press, vol. 16(3), pages 619-631, July.
    6. Anonymous, 1962. "International Monetary Fund," International Organization, Cambridge University Press, vol. 16(1), pages 230-231, January.
    7. Anonymous, 1962. "International Monetary Fund," International Organization, Cambridge University Press, vol. 16(4), pages 876-878, October.
    8. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bortz Pablo Gabriel & Michelena Gabriel & Toledo Fernando, 2018. "Foreign debt, conflicting claims and income policies in a Kaleckian model of growth and distribution," Journal of Globalization and Development, De Gruyter, vol. 9(1), pages 1-22, June.
    2. Köhler, Karsten, 2016. "Currency devaluations, aggregate demand, and debt dynamics in an economy with foreign currency liabilities," IPE Working Papers 78/2016, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Alimov, Behzod, 2022. "The dynamic effects of debt and equity inflows: Evidence from emerging and developing countries," The Journal of Economic Asymmetries, Elsevier, vol. 26(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ahmed, Walid M.A., 2020. "Corruption and equity market performance: International comparative evidence," Pacific-Basin Finance Journal, Elsevier, vol. 60(C).
    2. Pradipta Kumar Sahoo & D. Tripati Rao & Badri Narayan Rath, 2019. "Does Financial Integration Reduce Output Volatility? New Evidence from Cross‐Country Data," Economic Papers, The Economic Society of Australia, vol. 38(1), pages 41-55, March.
    3. Petar Stankov, 2018. "Banking Crises and Reversals in Financial Reforms," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 68(5), pages 442-459, October.
    4. Guglielmo Maria Caporale & Thouraya Hadj Amor & Christophe Rault, 2014. "Sources Of Real Exchange Rate Volatility And International Financial Integration: A Dynamic Generalised Method Of Moments Panel Approach," Journal of International Development, John Wiley & Sons, Ltd., vol. 26(6), pages 810-820, August.
    5. Cosimo Magazzino, 2012. "Fiscal Policy, Consumption and Current Account in the European Countries," Economics Bulletin, AccessEcon, vol. 32(2), pages 1330-1344.
    6. Buch, Claudia M. & Doepke, Joerg & Pierdzioch, Christian, 2005. "Financial openness and business cycle volatility," Journal of International Money and Finance, Elsevier, vol. 24(5), pages 744-765, September.
    7. Guglielmo Maria Caporale & Thouraya Hadj Amor & Christophe Rault, 2011. "Sources of Real Exchange Rate Volatility and International Financial Integration: A Dynamic GMM Panel Approach," CESifo Working Paper Series 3645, CESifo.
    8. Dąbrowski, Marek A. & Papież, Monika & Śmiech, Sławomir, 2021. "Output volatility and exchange rates: New evidence from the updated de facto exchange rate regime classifications," MPRA Paper 107133, University Library of Munich, Germany.
    9. Hugo J. Faria & Hugo M. Montesinos-Yufa & Daniel R. Morales, 2014. "Should the Modernization Hypothesis Survive Acemoglu, Johnson, Robinson, and Yared? Some More Evidence," Econ Journal Watch, Econ Journal Watch, vol. 11(1), pages 17-36, January.
    10. Dirk Steffen & Ingo Pitterle, 2004. "Spillover Effects of Fiscal Policy Under Flexible Exchange Rates," Econometric Society 2004 Australasian Meetings 286, Econometric Society.
    11. Mădălin Viziniuc, 2017. "Potential Gains from Cooperation Between Monetary and Macroprudential Policies: The Case of an Emerging Economy," Eastern European Economics, Taylor & Francis Journals, vol. 55(5), pages 420-452, September.
    12. Edward Ghartey, 2006. "Exchange Pressure, Sterilized Intervention and Monetary Policy in Ghana," EcoMod2006 272100031, EcoMod.
    13. William Scarth, 2014. "User Discretion Advised: Fiscal Consolidation and the Recovery," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 412, July.
    14. Jyh-Lin Wu, 1994. "Fiscal announcements and real exchange rate dynamics," Open Economies Review, Springer, vol. 5(2), pages 177-190, March.
    15. Lucian Croitoru, 2018. "How Countries’ Different Attitudes towards Inflation can thwart the European Dream," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 21(70), pages 2-41, December.
    16. Amir H. Mozayani & Sanaz Parvizi, 2016. "Exchange Rate Misalignment in Oil Exporting Countries (OPEC): Focusing on Iran," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 20(2), pages 261-276, Spring.
    17. Michael Michaely, 1971. "An Over-all View of Policy Patterns," NBER Chapters, in: The Responsiveness of Demand Policies to Balance of Payments: Postwar Patterns, pages 30-70, National Bureau of Economic Research, Inc.
    18. Nazia Abdul Rehman & Musarrat Shamshir & Khurram Shakir, 2020. "Correlation of Macroeconomic Variables with Twin Deficit in Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 16(1), pages 16-11.
    19. J. Scott Davis & Ignacio Presno, 2014. "Capital controls as an instrument of monetary policy," Globalization Institute Working Papers 171, Federal Reserve Bank of Dallas.
    20. Yana Valeryevna Dyomina, 2014. "Balance of Payments of East Asian Countries: Impact of the Coordinated Monetary Policy," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 1, pages 138-152.

    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:anp:en2009:108. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Rodrigo Zadra Armond (email available below). General contact details of provider: https://edirc.repec.org/data/anpecea.html .

    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.