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External Debt And Gross Domestic Product In Bangladesh: A Co-Integration Analysis

Author

Listed:
  • Mohammad Morshedur RAHMAN

    (University of Chittagong, Bangladesh)

  • Mohammad Abul BASHAR

    (University of Chittagong, Bangladesh)

  • Suman DEY

    (BGC Trust University Bangladesh, Bangladesh)

Abstract

External Debt (ED) is considered as a significant source of income for developing countries. Bangladesh relied on foreign debt to finance its balance of payments deficit and saving investment gap. Primary objective of this paper is to explore the relationship between external debt and Gross Domestic Products in Bangladesh for the period of 1972-2010, using time series econometric technique. We took a point of glance of external debt and economic performance of Bangladesh. The results show that there is a positive significant correlation between Gross Domestic Products (GDP) and External Debt (ED). The empirical results suggest the existence of long-run relationship between GDP and ED. The result of Granger’s Causality test implies that there is bi-directional causality runs through GDP to ED as well as ED to GDP.

Suggested Citation

  • Mohammad Morshedur RAHMAN & Mohammad Abul BASHAR & Suman DEY, 2012. "External Debt And Gross Domestic Product In Bangladesh: A Co-Integration Analysis," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 4(4), pages 28-36, December.
    • Handle: RePEc:rom:mrpase:v:4:y:2012:i:4:p:28-36
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    References listed on IDEAS

    as
    1. Rehana Siddiqui & Afia Malik, 2001. "Debt and Economic Growth in South Asia," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(4), pages 677-688.
    2. Jayaraman, T.K. & Lau, Evan, 2009. "Does external debt lead to economic growth in Pacific island countries," Journal of Policy Modeling, Elsevier, vol. 31(2), pages 272-288.
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    Cited by:

    1. Lawal Isola Adedoyin & Bibire Mabel Babalola & Adegbola O. Otekunri & Lawal Isola Adedoyin, 2016. "External Debt and Economic Growth: Evidence from Nigeria," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 12(6), pages 179-194, DECEMBER.
    2. Md Mahbub Alam & Md Nazmus Sadekin & Rabiul Islam & Syed Moudud-Ul-Huq, 2022. "Effect of Deficit Financing on Economic Growth in Bangladesh: Cointegration and VECM Approach," FIIB Business Review, , vol. 11(2), pages 174-188, June.
    3. Subrata Deb Nath & Md. Rezaul Karim & Faruk Hossain & Mohammed Main Uddin, 2023. "Impact of External Public Debt on Economic Growth: A Case Study of Bangladesh," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 14(3), pages 01-08, September.

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