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External Debt- Economic Growth Nexus in Selected CEE Countries

Author

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  • Serhan ÇIFTÇIOĞLU

    (Eastern Mediterranean University, Famagusta, Cyprus.)

  • Amin SOKHANVAR

    (Eastern Mediterranean University, Famagusta, Cyprus.)

Abstract

This paper presents new evidence regarding the potential adverse effects of external debt on long-run economic growth in a sample of twelve emerging economies of Central and Eastern Europe (CEE). The empirical findings of the paper suggest that policy makers in many of CEE countries should be encouraged to evaluate the long-run costs and benefits of existing fully liberalized capital account regimes which allow both private and public sectors to finance their expenditures by external borrowing. These basic insights of the paper are obtained from the application of panel regression and Granger causality analysis for a sample of twelve CEE countries using annual data for the period of 1995- 2014. The Granger causality tests have shown that there is a statistically significant causal effect of external debt on economic growth in eight countries.

Suggested Citation

  • Serhan ÇIFTÇIOĞLU & Amin SOKHANVAR, 2018. "External Debt- Economic Growth Nexus in Selected CEE Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 85-100, December.
    • Handle: RePEc:rjr:romjef:v::y:2018:i:4:p:85-100
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    References listed on IDEAS

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    Cited by:

    1. İbrahim ÖZMEN, 2022. "New Evidence from Government Debt and Economic Growth in Core and Periphery European Union Countries : Asymmetric Panel Causality," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 167-187, October.
    2. Minhaj ud-Din & Muhammad Azam Khan & Muhammad Tariq, 2020. "External Debt - Blessing or Curse: Empirical Evidence from Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 235-246.
    3. Oyadeyi, Olajide O. & Agboola, Olayode W. & Okunade, Solomon O. & Osinubi, Tolulope T., 2024. "The debt-growth nexus and debt sustainability in Nigeria: Are there reasons to be concerned?," Journal of Policy Modeling, Elsevier, vol. 46(1), pages 129-152.
    4. Bardhyl Dauti & Shiret Elezi, 2022. "Economic growth in the Central East European Union and the Western Balkan countries in the course of Stability and Growth Pact and COVID-19," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 40(1), pages 29-61.
    5. Felix Fofana N¡¯Zue, 2020. "Is External Debt Hampering Growth in the ECOWAS Region?," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 12(4), pages 1-54, April.
    6. 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.
    7. Josip Tica & Viktor Viljevac, 2020. "Thirty Years After: Economic Growth in Transition Countries," EFZG Working Papers Series 2005, Faculty of Economics and Business, University of Zagreb.
    8. Yilmaz BAYAR & Mahmut Unsal SASMAZ, 2019. "Foreign borrowing, foreign direct investment inflows and economic growth in European Union transition economies," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 10, pages 107-125, December.
    9. Taner Turan & Halit Yanıkkaya, 2021. "External debt, growth and investment for developing countries: some evidence for the debt overhang hypothesis," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 20(3), pages 319-341, September.
    10. Adewale Hassan & Daniel Meyer, 2021. "Exploring the Channels of Transmission between External Debt and Economic Growth: Evidence from Sub-Saharan African Countries," Economies, MDPI, vol. 9(2), pages 1-16, April.
    11. Charles Bahr & Lee Hui Shan & Alfred Lam, 2020. "The Macroeconomic Effects of Public Debt: An Empirical Analysis of Evidence from Canada," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 10(1), pages 1-9.

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    More about this item

    Keywords

    external debt; GDP growth; investment; trade openness; inflation;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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