Determinants of External Debt: The Case of Malaysia

Gökmenoğlu, Korhan K.; Rafik, Rabiatul Adawiyah Mohamed

doi:10.1007/978-3-030-01784-2_2

Cited by 15 publications

(15 citation statements)

References 60 publications

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“…This paper used the autoregressive distributed lag (ARDL) structural break to empirically test the long and short run to determine Somalia's external debt from 1980 to 2018 and to examine the long-term with the error correction model to determine whether the variables have existing short-term relationships. This study employs and follows the existing framework determinants of foreign debt literature, such as Bittencourt (2015) and Gokmenoglu & Rafik (2018). Therefore, the basic specification of the model is presented as:…”

Section: Methodsmentioning

confidence: 99%

“…An interest ceiling is likely to be used as a debt liquidation tool that affects structural change, largely introduced after re-democratization, but is not expressed in the study carried out here as disparity does not affect the scale of the government. More recent studies found determinants of external debt, such as that of Gokmenoglu & Rafik (2018) who found that through increasing GDP the Malaysian government can afford to reduce external debt, which means that the government relies on GDP to repay foreign debt. Conversely, the amount of external controlling foreign debt.…”

Section: Literature Reviewmentioning

confidence: 99%

“…ARDL structural break is used in this paper to test the co-integration approach to examine the model of long run and error correction to determine whether short-run relationships between variables exist. This study employs and follows the existing framework determinants of foreign debt literature such as Bittencourt (2015) and Gokmenoglu and Rafik (2018).…”

Section: Conclusion and Recommendationsmentioning

confidence: 99%

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Determinants of External Debt: The Case of Somalia

Omar¹,

Ibrahim

2021

Asian Development Policy Review

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Most emerging countries owe substantial external debt and depend on foreign aid to achieve sustainable economic development. However, this paper's key purpose is to examine the determinants of Somalia's external debt. To achieve this, the study used the autoregressive distributed lag (ARDL) model and cointegration test to establish the short-and long-run relationships during the period from 1980 to 2018. The results show that exchange rate and domestic investment have a significant and positive effect on external debt in the long run, while GDP per capita and government expenditure have a significant negative relationship with external debt; the result in the short run is consistent with the long-run result. The study recommends that the government of Somalia should also concentrate on the profitable sectors (e.g., livestock, fisheries and agriculture) with a view to improving the production and revenue base in order to minimize external debt, government expenditure and imports. Similarly, the expansion of a simpler tax base system and the removal of spending dependence on fiscal stability would boost fiscal balance. Many governments have disguised borrowing by those fiscal measures, which have expanded debt stocks. Foreign debt and aid dependence are not the best ways to ensure a healthy economy, so the Somali governments should start rethinking the allocation of foreign debt and policymakers could promote a strategy and policy to reduce high dependence on debt that has worked in the past. Contribution/Originality: This study contributes to the existing literature by investigating the determinants of external debt in Somalia.

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Section: Methodsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Conclusion and Recommendationsmentioning

confidence: 99%

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Determinants of External Debt: The Case of Somalia

Omar¹,

Ibrahim

2021

Asian Development Policy Review

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“…For instance, Dawood et al (2021) suggest that economic growth decreases external debt, implying that as countries increase their income, they become less dependent on foreign debt and therefore reduce their borrowing. Likewise, Gokmenoglu and Rafik (2018) and Murwirapachena and Kapingura (2015) pointed out a negative relationship between economic growth and external debt. In the presence of the endogeneity issue, a simple OLS regression may yield spurious results (Bound et al, 1995;Staiger & Stock, 1997).…”

Section: Model Specificationsmentioning

confidence: 99%

Would external debts promote sustainable development in emerging and low‐income countries?

Luu,

Phung

2023

J of Intl Development

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This paper investigates how external debts influence sustainable development in emerging economies and low‐income countries from 101 countries from 2016 to 2020. External debt significantly aids countries in achieving their sustainable development goals but affects individual goal differently. While external debts promote well‐being, education quality, gender equality, employment, economic growth, and institutional strength, they negatively affect the sustainability of cities, communities, and ecosystems. Long‐term external and public debts make a significant contribution to promoting sustainable development, but excessive external borrowing could hamper sustainable development progress.

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“…In the context of our literature review, the majority of studies center on performing an influence analysis to evaluate the correlation between changes in specific variables and the level of debt (typically measured as either an absolute value or a percentage of GDP, although alternative methods exist-refer to the appendix). Other studies go a step further and engage in causality analyses, following, among others, the Granger approach (Mah et al 2013;Donayre and Taivan 2017;Gokmenoglu and Rafik 2018;Marire 2022). These analyses seek not only to identify associations between some variables such as government spending or economic growth (Donayre and Taivan 2017;De Vita, Trachanas and Luo 2018;Marire 2022) but also to determine whether variations in these variables actually cause changes in the level of debt or whether bidirectional relationships exist.…”

Section: Empirical Literaturementioning

confidence: 99%

Analyzing the Importance of the Determinants of Public Debt and Its Policy Implications: A Survey of Literature

Cifuentes-Faura,

Simionescu

2023

Public Finance Review

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Public debt is a key issue for government institutions, both because of the amount of its revenues, which partly compensate for the possible shortfall in tax collection, and because it is an essential instrument of fiscal policy for the government. This paper reviews the literature on the determinants of public debt in order to identify the explanatory variables of public debt according to the main theoretical and empirical studies. This work will support policy makers who have to obtain financial resources to cover essential and very necessary expenditures nowadays, such as health, education, or infrastructure investment, by controlling debt levels and fiscal pressure. The main policy implication we can derive from these results is that governments should use some of these instruments to reduce general government debt.

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Determinants of External Debt: The Case of Malaysia

Cited by 15 publications

References 60 publications

Determinants of External Debt: The Case of Somalia

Determinants of External Debt: The Case of Somalia

Would external debts promote sustainable development in emerging and low‐income countries?

Analyzing the Importance of the Determinants of Public Debt and Its Policy Implications: A Survey of Literature

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