The Impact of Public Debt on Economic Growth of Pakistan

Khan, Amara Akram; Rauf, Abdur; Haq, Mirajul; Anwar, Nighat

doi:10.6007/ijarems/v5-i2/2211

Cited by 8 publications

(8 citation statements)

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“…Particularly, it agrees with studies made by Were (2001), Presbitero (2006), Sen et al (2007), Adegbite et al (2008), Hwang et al (2010), Malik et al (2010), Daud and Podivinsky (2012), Azam et al (2013), Atique and Malik (2012), Shabbir (2013), Lee and Ng (2015), Daka et al (2017), Pegkas (2018), Shittu et al (2018), Shkolnyk and Koilo (2018), Kharusi and Ada (2018), Sajjad et al (2018), Senadza et al (2018), Nor-Eddine andChkiriba (2019), and Moh and Jaradat (2019) who found that debt overhang dilemma prevails. However, these findings are contradictory to the findings of Siddiqui and Malik (2001), Maana et al (2008), Khan et al (2016), Jilenga et al (2016), Sánchez-Juárez and García-Almada (2016, Talreja et al (2016), Chaudhry et al (2017), andNdubuisi (2017), who found that debt overhang dilemma does not prevails. For them, overseas borrowing acts as a stimulating factor for the economic growth.…”

Section: Long Run Estimatesmentioning

confidence: 74%

“…Shahzad et al (2014) also concluded that external debt dampens the growth process in Pakistan. In contrast, Khan et al (2016) found that the association of public debt with the economic growth is positive but statistically insignificant. On the other hand, the findings of Jibran et al (2016) and Sajjad et al (2018) indicated that debt crowding-out hypothesis is effective for Pakistan's economy.…”

Section: Literature On the External Debt And Growth Relationship In Pakistanmentioning

confidence: 81%

“…Similarly, those who tried to connect the external debt with growth, without incorporating the debt overhang or debt crowding-out effects, do believe that debt is a curse for the economic growth of Pakistan (Malik et al, 2010;Ali and Mustafa, 2012;Jibran et al, 2016;Sajjad et al, 2018). However, there are few researchers who believe on the positive externalities and blessings of the foreign debt and consider it beneficial for boosting the standard of living and economic growth of Pakistan (Siddiqui and Malik, 2001;Khan et al, 2016).…”

Section: Introducti̇onmentioning

confidence: 99%

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External Debt - Blessing or Curse: Empirical Evidence From Pakistan

ud-Din¹,

Azam

Tariq³

2020

IJEFI

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This study investigates the impact of external debt on the economic growth of Pakistan using annual time series data over the period 1976 to 2018. For this purpose, the syntheses of debt overhang and debt crowding-out hypotheses are examined within the framework of augmented Solow growth model. An autoregressive distributed lag (ARDL) model, Error Correction model and appropriate data diagnostic tests are applied. The empirical results indicate that external borrowing and debt servicing hamper the economic growth in Pakistan. Results reveal that 1% increase in stock of external debt is causing 0.20% fall in economic growth. Similarly,1% increase in debt servicing is causing 0.13% fall in economic growth. The findings of this study suggest that the policy makers should create a conductive environment for bringing increase in the level of domestic savings and exports, and should focus on increasing the inflow of capital through foreign direct investment and attracting the foreign exchange reserves. Incorporation of debt monitoring system along with its management is also required for minimizing the adverse effects of debt overhang and debt crowding out effects of the external debt.

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Section: Long Run Estimatesmentioning

confidence: 74%

Section: Literature On the External Debt And Growth Relationship In Pakistanmentioning

confidence: 81%

Section: Introducti̇onmentioning

confidence: 99%

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External Debt - Blessing or Curse: Empirical Evidence From Pakistan

ud-Din¹,

Azam

Tariq³

2020

IJEFI

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“…External debt and economic growth relationships are exposed [38] and concluded that external debt has a positive and significant impact on economic growth. The influence of public debt on economic growth analysed [39], and based on empirical outcomes, researchers revealed a positive but insignificant relationship between public debt and the economic growth of Pakistan. The connection between central government debt, external debt, household debt, and GDP was analysed [40].…”

Section: Research Elaborationsmentioning

confidence: 99%

External Debt, NODA, and GDP Growth Nexus for South Asian and Southeast Asian Selected Economies

Mazher¹,

Dahalan²

2022

JPOME

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The fundamental aim of this study is to fetch out the influence of NODA (net official development assistance) and EDS (external debt stock) on GDP growth in South Asian and Southeast Asian designated economies over 1971 to 2019. This study refers to the Solow-Swan model of economic growth as hypothetical framework in its elementary sort and employ factors such as NODA, EDS, savings, capital, depreciation, governance, and in addition total natural resources rent as control variable. Using panel data sourced from WDI (world development indicators). This study employed various econometric techniques comprise FEM (fixed effect model), panel cointegration, panel dynamic least square (DOLS), and Granger causality test for desired regression estimations. Empirical estimations evident that EDS has a negative and significant impact on GDP growth whereas, NODA had a negative and insignificant impact on GDP growth. A positive and significant influence of savings on GDP growth observed and estimation confirm that by increasing 1% in savings may cause an increase in GDP growth by 13.19 units. Capital has a positive and significant impact on GDP growth and estimation outcomes confirm that an increase of 1% in capital may cause an increase of 10.14 units. A negative and significant impact of depreciation on GDP growth revealed and it is intended that increasing 1% in depreciation may cause a decrease in GDP growth by 5.26 units. A positive and significant impact of TNRR on GDP growth revealed and estimations confirm that an increase of 1% in total natural resource rent may cause an increase in GDP growth by 0.099 units. While, impact of governance on GDP growth revealed insignificant. Lastly, it is also endorsed that a uni-directional Granger causality runs from GDP growth to EDS, EDS to NODA, and no causal relationship has been confirmed between NODA and GDP growth in SA and SEA designated economies over 1971 to 2019.

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“…The study also discovered that budget deficit, government consumption and external debt service are a decreasing function of GDP. Khan, Rauf, Mirajul-haq, Anwar (2016) examined the impact of public debt on economic growth of Pakistan. The study adopted quantitative research method as secondary data over the period of 1972 to 2013.…”

Section: Empirical Evidencesmentioning

confidence: 99%

Effect of Public Debt on Economic Growth of Nigeria: An Empirical Investigation

2020

IJBMR

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This study examined the effect of public debt on economic growth of Nigeria. Specifically, the study determined the impact of domestic debt on the economic growth of Nigeria; assessed the effect of external debt on the economic growth of Nigeria and analyzed the relationship public debt and the economic growth of Nigeria. Secondary time series data spanning thirty-seven years (1982-2018) was gathered in the study. Data gathered in the study was estimated using descriptive statistics, unit root test, Johansen co-integration test and vector error correction model. Discoveries from the study suggests that external debt exerts a negative long run and short run effect on economic growth of Nigeria and domestic debt was ascertained to exert positive long run and short run effect on economic growth of Nigeria. Based on these findings, the study suggested that policy makers should integrate appropriate measures towards ensuring suitable management of domestic debts; government should ensure that contracted national debts are directed towards encouraging investment in the country and government through necessary monitoring committees should ensure that national debts are directed toward the provision of basic amenities and services required for the development of communities and societies of the nation.

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The Impact of Public Debt on Economic Growth of Pakistan

Cited by 8 publications

References 1 publication

External Debt - Blessing or Curse: Empirical Evidence From Pakistan

External Debt - Blessing or Curse: Empirical Evidence From Pakistan

External Debt, NODA, and GDP Growth Nexus for South Asian and Southeast Asian Selected Economies

Effect of Public Debt on Economic Growth of Nigeria: An Empirical Investigation

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