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Determinants and Sustainability of External Debt: A Panel Data Analysis for Selected Islamic Countries

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  • Waheed, Abdul
  • Abbas, Shujaat

Abstract

This study analyses the determinants and sustainability of external debt of selected Islamic countries. The study uses panel data of ten oil & gas exporting countries and nine oil & gas importing countries from 2004 to 2016. For oil & gas exporting Islamic countries, economic growth, central government revenue, FDI, and population have a negative effect on external debt, while central government expenditure, trade openness, inflation, and current account balance have a positive effect on external debt. For oil & gas importing Islamic countries, economic growth, central government revenue, current account balance, domestic investment, and labour force have a negative effect on external debt; whereas, FDI and foreign exchange reserve have a positive effect on external debt. The result of sustainability analysis shows that for many oil & gas importing Islamic countries, the actual debt is more than their expected debt based on their macroeconomic performance. For oil & gas exporting Islamic countries, the situation is not as alarming and their external debt position is still better, except few countries.

Suggested Citation

  • Waheed, Abdul & Abbas, Shujaat, 2021. "Determinants and Sustainability of External Debt: A Panel Data Analysis for Selected Islamic Countries," MPRA Paper 107486, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:107486
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    References listed on IDEAS

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    1. repec:rza:wpaper:341 is not listed on IDEAS
    2. Hajivassiliou, Vassilis A., 1987. "The external debt repayments problems of LDC's : An econometric model based on panel data," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 205-230.
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    7. Abdul Waheed, 2017. "Determinants of External Debt: A Panel Data Analysis for Oil and Gas Exporting and Importing Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 234-240.
    8. Zafar, Sabahat & Butt, Muhammad Sabihuddin, 2008. "Impact of Trade Liberalization on External Debt Burden: Econometric Evidence from Pakistan," MPRA Paper 9548, University Library of Munich, Germany.
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    JEL classification:

    • F1 - International Economics - - Trade
    • F3 - International Economics - - International Finance
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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