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Does external debt- poverty relationship confirm the debtoverhang hypothesis for developing counties?

Author

Listed:
  • Taha Zaghdoudi

    () (Faculty of Law, Economics and Management of Jendouba, Tunisia)

  • Abdelaziz Hakimi

    () (Faculty of Law, Economics and Management of Jendouba, Tunisia)

Abstract

This paper investigates the impact of external debt on poverty for a panel of 25 developing countries over the period 2000-2015. By performing panel cointegration model, we found strong evidence of a positive and significant long-run relationship between poverty, external debt, GDP per capita, gross domestic and fixed investment. Findings indicate also the existence of negative and significant association between poverty, infrastructure, health condition and openness. The Granger-causality results indicate bidirectional causality between external debt and poverty in both short- and long-run. This paper supports the view that external debt increase poverty in developing countries.

Suggested Citation

  • Taha Zaghdoudi & Abdelaziz Hakimi, 2017. "Does external debt- poverty relationship confirm the debtoverhang hypothesis for developing counties?," Economics Bulletin, AccessEcon, vol. 37(2), pages 653-665.
  • Handle: RePEc:ebl:ecbull:eb-16-00874
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Poverty; External debt;

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • F3 - International Economics - - International Finance

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