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Threshold Effects of External Debt on Economic Growth of Iran: Smooth Transition Regression (STR) Model

Author

Listed:
  • Alizadeh, Mohammad

    () (Assistant Professor of Economics, Lorestan University)

  • Golkhandan , Abolghasem

    () (Ph.D. Student in Economics, Lorestan University)

  • Mohamadian Mansoor , Sahebeh

    () (Lecturer, University of Payam-Noor)

Abstract

Previous studies show conflicting results about the effects of external debt on economic growth in different countries; this inconsistency in results could be due to nonlinear effects of external debt on economic growth. The identification of this nonlinear relationship can be widely used in government policies toward external debt. This paper investigates the impact of external debt on economic growth in Iran during the period 1970-2014. For this purpose, is used the smooth transition regression (STR) model. Results of the estimated Smooth Transition Regression (STR) model, approved the nonlinear effects of external debt on economic growth, also external debt had a negative effect on economic growth in the form of a two regime structures with a threshold level of about 18770 million dollars. So that increases the intensity of this negative impact with crossing of threshold level and entering the second regime.

Suggested Citation

  • Alizadeh, Mohammad & Golkhandan , Abolghasem & Mohamadian Mansoor , Sahebeh, 2015. "Threshold Effects of External Debt on Economic Growth of Iran: Smooth Transition Regression (STR) Model," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 2(2), pages 1-24, September.
  • Handle: RePEc:ris:qjatoe:0009
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    More about this item

    Keywords

    External Debt; Economic Growth; Iran; Smooth Transition Regression (STR) Model.;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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