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The impact of external public debt on economic growth: an economic study: the case of Morocco

Author

Listed:
  • Amine Leghrari

    (Ph,D Student in Economic and Management, Departement of Economic and Management, Laboratory: Economic Sciences and Public Policy, Faculty of Economic and Management, Ibn Tofail University, Morocco)

  • Chakib Jerry

    (Professor of Mathematics and Statistics at the Faculty of Juridical, Economic and Social Sciences, University of Moulay Ismail, Morocco, Departement of Economic and Management, Laboratory: Economic Sciences and Public Policy, Faculty of Economic and Management, Ibn Tofail University, Morocco)

  • Mounir Jerry

    (Professor of Mathematics and Statistics at the Faculty of Economics and management, University of Ibn Tofail, Morocco, Departement of Economic and Management, Laboratory: Economic Sciences and Public Policy, Faculty of Economic and Management, Ibn Tofail University, Morocco)

Abstract

This study examines the impact of external public debt on Morocco's economic growth from 1998 to 2022, using gross domestic product (GDP) as the dependent variable. Key explanatory variables include external public debt, gross national savings, external public debt service, and the investment rate. Employing annual time series data, the study adopts advanced econometric techniques such as the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests to assess stationarity, Johansen cointegration to identify long-run relationships, and the Vector Error Correction Model (VECM) to analyze both short-and long-term dynamics. The results show a significant long-run equilibrium relationship between the variables. External public debt and debt servicing negatively affect GDP, highlighting their detrimental impact on Morocco's economy. Conversely, gross national savings and the investment rate show potential for positive growth contributions. These findings align with global evidence and emphasize the critical need for effective external debt management. To enhance growth, policymakers should focus on optimizing debt allocation toward productive investments, diversifying exports to bolster foreign exchange reserves, and encouraging domestic savings to reduce external borrowing reliance. This study provides valuable insights into debt sustainability challenges and contributes to the discourse on public finance strategies for developing economies like Morocco.

Suggested Citation

  • Amine Leghrari & Chakib Jerry & Mounir Jerry, 2025. "The impact of external public debt on economic growth: an economic study: the case of Morocco," Post-Print hal-05021290, HAL.
    • Handle: RePEc:hal:journl:hal-05021290
    DOI: 10.7176/JESD/16-1-03
    Note: View the original document on HAL open archive server: https://hal.science/hal-05021290v1
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    2. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    3. Krugman, Paul, 1988. "Financing vs. forgiving a debt overhang," Journal of Development Economics, Elsevier, vol. 29(3), pages 253-268, November.
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