A meta-analysis of the relationship between debt and growth
Purpose - Developing countries tend to be characterised by relatively high levels of indebtedness. The proceeds from debt can potentially have positive effects on growth, if the funds are employed to expand the productive capacity of the nation. The paper aims to investigate whether debt can be used to finance growth. Design/methodology/approach - The paper utilizes meta-analysis approach to address the issue. This approach allows researchers to combine the results from both published and unpublished research to gain insights regarding the directional and statistical significance of the relationship between the two variables. Findings - The results suggest that there exist a positive relationship between debt and economic growth. Research limitations/implications - The findings from the paper suggest that future research should be conscious of the effect model specification can have on the results on their studies. Indeed, when external debt, the fiscal balance, debt relief where included in the econometric specification the relationship between debt and growth was weakened. Practical implications - Economic growth should be stimulated, if the proceeds from debt issues are utilized to finance investment in productive areas of economic activity. Originality/value - While the relationship between debt and growth has stimulated a number of research papers, seminars and conferences, to date, however, no clear answer to the question is available. Through the use of meta-analysis, this paper allows the reader to glean the main findings from this body of research.
Volume (Year): 9 (2010)
Issue (Month): 3 (September)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://www.emeraldinsight.com/ijdi.htm Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bjerg, Christina & Bjørnskov, Christian & Holm, Anne, 2011.
"Growth, debt burdens and alleviating effects of foreign aid in least developed countries,"
European Journal of Political Economy,
Elsevier, vol. 27(1), pages 143-153, March.
- Bjerg, Christina & Bjørnskov, Christian & Holm, Anne, 2007. "Growth, Debt Burdens and Alleviating Effects of Foreign Aid in Least Developed Countries," Working Papers 07-1, University of Aarhus, Aarhus School of Business, Department of Economics.
- Krugman, Paul, 1988. "Financing vs. forgiving a debt overhang," Journal of Development Economics, Elsevier, vol. 29(3), pages 253-268, November.
- Paul R. Krugman, 1988. "Financing vs. Forgiving a Debt Overhang," NBER Working Papers 2486, National Bureau of Economic Research, Inc.
- S M Ali Abbas & Jakob E Christensen, 2010. "The Role of Domestic Debt Markets in Economic Growth: An Empirical Investigation for Low-Income Countries and Emerging Markets," IMF Staff Papers, Palgrave Macmillan, vol. 57(1), pages 209-255, April.
- S. M. Ali Abbas & Jakob E Christensen, 2007. "The Role of Domestic Debt Markets in Economic Growth; An Empirical Investigation for Low-Income Countries and Emerging Markets," IMF Working Papers 07/127, International Monetary Fund.
- Robert E. Looney & P.C. Frederiksen, 1986. "Defense Expenditures, External Public Debt and Growth in Developing Countries," Journal of Peace Research, Peace Research Institute Oslo, vol. 23(4), pages 329-337, December.
- Ralf Hepp, 2005. "Can Debt Relief Buy Growth?," International Finance 0510003, EconWPA.
- Ralf Hepp, 2008. "Can Debt Relief Buy Growth?," Fordham Economics Discussion Paper Series dp2008-22, Fordham University, Department of Economics.
- Card, David & Krueger, Alan B, 1995. "Time-Series Minimum-Wage Studies: A Meta-analysis," American Economic Review, American Economic Association, vol. 85(2), pages 238-243, May.
- Helene Poirson Ward & Luca A Ricci & Catherine A Pattillo, 2004. "What Are the Channels Through Which External Debt Affects Growth?," IMF Working Papers 04/15, International Monetary Fund.
- Presbitero Andrea F., 2006. "The Debt-Growth Nexus: a Dynamic Panel Data Estimation," Rivista italiana degli economisti, Società editrice il Mulino, issue 3, pages 417-462.
- Andrea PRESBITERO, 2005. "The Debt-Growth Nexus: a Dynamic Panel Data Estimation," Working Papers 243, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
- Oks, Daniel & van Wijnbergen, Sweder, 1995. "Mexico after the debt crisis: is growth sustainable?," Journal of Development Economics, Elsevier, vol. 47(1), pages 155-178, June.
- Oks, Daniel*van Wijnbergen, Sweder, 1994. "Mexico after the debt crisis : is growth sustainable?," Policy Research Working Paper Series 1378, The World Bank.
- John Weeks, 2000. "Latin America and the 'high performing Asian economies': growth and debt," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(5), pages 625-654.
- Tito Cordella & Luca A Ricci & Marta Ruiz-Arranz, 2005. "Debt Overhang or Debt Irrelevance? Revisiting the Debt-Growth Link," IMF Working Papers 05/223, International Monetary Fund. Full references (including those not matched with items on IDEAS)