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External Debt, Institutional Quality And Economic Growth

Author

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  • Siti Nurazira Mohd Daud

    (University Utara Malaysia)

Abstract

This paper examines the role of institutional quality in the external debt–economic growth relationship. By taking a dynamic threshold specification to a panel data consisting of 53 countries, we find that external debt has an adverse effect on a country’s growth, while institutional quality improves it. We find that the effect of external debt on economic growth depends on the level of institutional quality. In addition, at a high level of external debt, the effect of institutional quality on growth is very small, suggesting that the adverse effect of external debt on a country’s economic growth holds true.

Suggested Citation

  • Siti Nurazira Mohd Daud, 2020. "External Debt, Institutional Quality And Economic Growth," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 23(2), pages 201-220, July.
    • Handle: RePEc:idn:journl:v:23:y:2020:i:2d:p:221-238
    DOI: https://doi.org/10.21098/bemp.v23i2.1173
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    Cited by:

    1. Charles O Manasseh & Felicia C Abada & Ebelechukwu L Okiche & Ogochukwu Okanya & Ifeoma C Nwakoby & Peter Offu & Anuli R Ogbuagu & Chiedozie O Okafor & Paul C Obidike & Nnenna G Nwonye, 2022. "External debt and economic growth in Sub-Saharan Africa: Does governance matter?," PLOS ONE, Public Library of Science, vol. 17(3), pages 1-28, March.
    2. Mindaugas Butkus & Diana Cibulskiene & Lina Garsviene & Janina Seputiene, 2021. "The Heterogeneous Public Debt–Growth Relationship: The Role of the Expenditure Multiplier," Sustainability, MDPI, vol. 13(9), pages 1-22, April.

    More about this item

    Keywords

    External debt; Economic growth; Institutional quality; Emerging economies;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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