The Factors Affecting The External Debt: Case Of Turkey

Abstract

This study aims to examine the most important factors affecting the external debt in the Turkish economy. The relationship between the external debt and GDP, exports, imports, debt service to exports, foreign direct investment, reserves of foreign exchange and official exchange rates is estimated during the period 1980-2017, based on a number of standard studies in this field. In analyzing the time series, the study applies Johansson's co-integration test and Granger's Causality test within the VAR model. The study concluded to the following results: 1.There is a cointegration relationship between the study variables. That's, that there is a long-term equilibrium relationship between the external debt and its determinants. 2. There is a directional causal relationship from the foreign reserve to the external debt. 3. There is a directional causal relationship from the external debt to the exports. 4. The results of estimating regression model in the long-term showed that GDP, FDI, debt service to exports and foreign reserves are the most important factors affecting the external debt.

Factors Affecting External Debt in Transition Economies: The Case of Central Asia and the Caucasus

“…The empirical results of this study show that there is a causality relationship between net foreign debt stock and economic growth. Arslan & Athwari (2019), examined the factors affecting the external debt for Turkey for the period of 1980-2017. The empirical results show that showed that economic growth, foreign direct investment, foreign reserves and debt service to exports are the most important factors affecting the external debt.…”