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Does External Debt Causes Economic Growth: A Case Study of Pakistan

Author

Listed:
  • Mohsin Nawaz

    () (M.Phil student, Applied Economics Research Centre University of Karachi, Karachi)

  • Maria Qureshi

    () (M.Phil student, Applied Economics Research Centre University of Karachi, Karachi)

  • Naveed Wahid Awan

    () (PAF KIET Karachi)

Abstract

This study attempts to examine the long run and short run dynamics of external debt and economic growth in Pakistan. For this purpose, we employed the Johansen cointegration test and Granger causality test. The empirical analysis cover the study span from 1980 to 2010, shows the evidence of long run relationship between external debt and economic growth. In the short run, there is bidirectional causality exist between external debt and economic growth

Suggested Citation

  • Mohsin Nawaz & Maria Qureshi & Naveed Wahid Awan, 2012. "Does External Debt Causes Economic Growth: A Case Study of Pakistan," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(43), pages 131-144, March.
  • Handle: RePEc:rej:journl:v:15:y:2012:i:43:p:131-144
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    References listed on IDEAS

    as
    1. Ndikumana, Leonce, 2004. "Additionality of debt relief and debt forgiveness, and implications for future volumes of official assistance," International Review of Economics & Finance, Elsevier, vol. 13(3), pages 325-340.
    2. Deshpande, Ashwini, 1997. "The debt overhang and the disincentive to invest," Journal of Development Economics, Elsevier, vol. 52(1), pages 169-187, February.
    3. Jayaraman, T.K. & Lau, Evan, 2009. "Does external debt lead to economic growth in Pacific island countries," Journal of Policy Modeling, Elsevier, vol. 31(2), pages 272-288.
    4. Freytag, Andreas & Pehnelt, Gernot, 2009. "Debt Relief and Governance Quality in Developing Countries," World Development, Elsevier, vol. 37(1), pages 62-80, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    External debt; Economic growth; Johansen Cointegration; Granger Causality; Impulse response functions;

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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