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Determinants of External Debt in Thailand and the Philippines

Author

Listed:
  • Evan Lau

    (Centre for Business, Economics and Finance Forecasting, Universiti Malaysia Sarawak, 94300 Kota Samarahan, Sarawak, Malaysia)

  • Alvina Syn-Yee Lee

    (Department of Economics, Faculty of Economics and Business, Universiti Malaysia Sarawak, 94300 Kota Samarahan, Sarawak, Malaysia)

Abstract

External debt (ED) has been the major global concern not only heavily indebted poor countries but also developing nations in resultants of the 2008 global financial crisis. It has become a well-discussed subject and generally a concern of global finance and world of economy greatly. This paper analyses the role of some macroeconomic variables in determining the ED burden in Thailand and the Philippines from 1976 to 2013. The results indicate the existence of short-run linkages originated from inflation rate (Consumer Price Index [CPI]) and real interest rate [RIR] to ED in the case of Thailand. As for the Philippines, although there is no evidence of short-run linkages origin from gross domestic product (GDP), CPI, RIR and M2 to ED, but the burden of short-run adjustment appears to have fallen mostly on GDP and M2. Further, dynamic econometric analysis suggests that money and quasi money (M2) to total reserves ratio is the most exogenous variable beyond the 50-years horizon. The study concludes that a sound debt management could be implemented to control debt accumulation and to reduce dependence on debt relief in the form of foreign aid.

Suggested Citation

  • Evan Lau & Alvina Syn-Yee Lee, 2016. "Determinants of External Debt in Thailand and the Philippines," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1973-1980.
    • Handle: RePEc:eco:journ1:2016-04-89
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    References listed on IDEAS

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    1. Constantin Anghelache & Mario G.R. Pagliacci & Constantin Mitrut, 2015. "Statistical-Econometric Models used in Economic Analysis," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 63(4), pages 9-15, April.
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    Cited by:

    1. Charles Bahr & Lee Hui Shan & Alfred Lam, 2020. "The Macroeconomic Effects of Public Debt: An Empirical Analysis of Evidence from Canada," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 10(1), pages 1-9.
    2. Amjad S. Qwader & Sulieman D. Aloshaibat, 2020. "Components of the Public Budget and their Effects on Public Debt in Jordan," International Journal of Economics and Financial Issues, Econjournals, vol. 10(3), pages 88-96.
    3. Chukwuebuka Bernard Azolibe, 2021. "Determinants of External Indebtedness in Heavily Indebted Poor Countries: What Macroeconomic and Socio-Economic Factors Matter?," The American Economist, Sage Publications, vol. 66(2), pages 249-264, October.

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    More about this item

    Keywords

    External Debt Burden; Thailand; The Philippines.;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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