An Empirical Test of a New Theory of Economic Growth – The Relationship Between External Debt and Economic Development
AbstractAnalyses of the nature of debt relying on the theory of rational expectations conclude that the burden of public debt need not fall on future generations if the present generation anticipates the higher taxes needed in the future for debt servicing. However, there have been many instances where increases in budget deficits have been followed by a decrease in the savings propensity of the private sector. Foreign exchange earnings also have to be set aside. It appears that the main problem for countries in an early stage of economic development, is that often the borrowings have not been productively employed so that a national debt crises results. Foreign lenders become increasingly reluctant to lend further amounts to a country, which has been a net capital importer. This paper puts forward a methodology of testing a new theory of economic growth that emphasises key factors determining the success or failure of policies that change underlying economic structures, and hence would lead to an intrinsic monitoring of “over-borrowing”.
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Bibliographic InfoPaper provided by Finance Discipline Group, UTS Business School, University of Technology, Sydney in its series Working Paper Series with number 144.
Date of creation: 01 Sep 2005
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economic growth; debt burden; regulation; ownership structures;
Other versions of this item:
- Carolyn Currie, 2005. "An Empirical Test of a New Theory of Economic Growth ? the Relationship Between External Debt and Economic Development," Working Paper Series 140, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- P11 - Economic Systems - - Capitalist Systems - - - Planning, Coordination, and Reform
- P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
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