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The Effect of Sovereign Debt on Economic Growth: The Case of Oil-Rich Countries

Author

Listed:
  • Hussein Salameh

    (Researcher, Amman, Jordan,)

  • Ahmed Alodadi

    (College of Business, King Khalid University, Abha, Saudi Arabia,)

  • Khaled Alzubi

    (College of Economics and Administrative Sciences, Hashemite University, Jordan.)

Abstract

Key studies have identified the need to study the role of sovereign debt on economic growth, particularly in relation to countries with heavily oil-based status economies. This paper applies a panel vector autoregressive approach to examine the impact of sovereign debt on economic prosperity in several oil-rich countries between 2002 and 2017. The results show that in oil countries, like other developing countries, government debt has not had a positive impact on enhancing economic growth, resulting in a reluctance of such countries to invest debts in production, and a desire for the type of diversification of sources of income observable in most advanced countries.

Suggested Citation

  • Hussein Salameh & Ahmed Alodadi & Khaled Alzubi, 2020. "The Effect of Sovereign Debt on Economic Growth: The Case of Oil-Rich Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 10(2), pages 262-267.
    • Handle: RePEc:eco:journ1:2020-02-30
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    References listed on IDEAS

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    1. Thomas Herndon & Michael Ash & Robert Pollin, 2014. "Does high public debt consistently stifle economic growth? A critique of Reinhart and Rogoff," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(2), pages 257-279.
    2. Panagiotis Pegkas, 2018. "The Effect of Government Debt and Other Determinants on Economic Growth: The Greek Experience," Economies, MDPI, vol. 6(1), pages 1-19, February.
    3. Lof, Matthijs & Malinen, Tuomas, 2014. "Does sovereign debt weaken economic growth? A panel VAR analysis," Economics Letters, Elsevier, vol. 122(3), pages 403-407.
    4. Baum, Anja & Checherita-Westphal, Cristina & Rother, Philipp, 2013. "Debt and growth: New evidence for the euro area," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 809-821.
    5. Nikolaos Antonakakis, 2014. "Sovereign Debt and Economic Growth Revisited: The Role of (Non-)Sustainable Debt Thresholds," Department of Economics Working Papers wuwp187, Vienna University of Economics and Business, Department of Economics.
    6. repec:eco:journ1:2014-02-19 is not listed on IDEAS
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    Cited by:

    1. Samson Edo, 2024. "Comparative Performance of Trade Openness and Sovereign Debt Accumulation in Fostering Economic Growth of Sub-Saharan African Countries," Foreign Trade Review, , vol. 59(1), pages 98-116, February.

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    More about this item

    Keywords

    Co-integration; Sovereign Debt; Oil-rich Countries;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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