IDEAS home Printed from https://ideas.repec.org/a/taf/oaefxx/v11y2023i2p2231226.html
   My bibliography  Save this article

The nexus of public debt and economic growth in Ethiopia: Is it symmetric?

Author

Listed:
  • Chala Amante Abate

Abstract

This study examines the nature of relationship between public debt and economic growth of Ethiopia. To this end, a time series data was collected over the period 1982–2018. Nonlinear ARDL and multiple thresholds nonlinear ARDL models were used to uncover whether the relationship between debt and economic growth of Ethiopia is asymmetric. Instrumental variable regression model with a quadratic specification was used to test threshold effect of debt. The results reveal there are evidences that support the existence of asymmetric relationship between the indicated variables. Accordingly, it was found that a major positive shock in debt is favorable to economic growth while the effect of a minor and negative shock to debt is unfavorable. The results further reveals that there is a threshold effect of debt such that it is beneficial to economic growth of Ethiopia when it is well below 66.75% of GDP or 36.27% of GNI. Above these threshold levels, debt incurred deteriorates economic growth of the country. The study recommends that government of Ethiopia should create conducive environment that helps to secure more debts from potential creditors and at the same time, keep the annual debt well below 66.75% of GDP and 36.27%.

Suggested Citation

  • Chala Amante Abate, 2023. "The nexus of public debt and economic growth in Ethiopia: Is it symmetric?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2231226-223, June.
    • Handle: RePEc:taf:oaefxx:v:11:y:2023:i:2:p:2231226
    DOI: 10.1080/23322039.2023.2231226
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/23322039.2023.2231226
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/23322039.2023.2231226?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:oaefxx:v:11:y:2023:i:2:p:2231226. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/OAEF20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.