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The symmetric and asymmetric impacts of external debt on economic growth in Tunisia: evidence from linear and nonlinear ARDL models

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  • Rima Aloulou

    (University of Sfax)

  • Maha Kalai

    (University of Sfax)

  • Kamel Helali

    (University of Sfax)

Abstract

This paper aims to empirically examine the symmetric and asymmetric impact of external debt on economic growth in Tunisia between 1965 and 2019. The empirical methodology used is based on the one hand on the linear autoregressive distributed lag (ARDL) model of Pesaran et al. (Econ Soc Monogr 31:371–413. https://doi.org/10.1371/journal.pone.0184474 , 2001), and on the other hand, on the nonlinear ARDL (NARDL) model of Shin et al. (Nucleic Acids Res 42(11):90. https://doi.org/10.1038/s41477-021-00976-0 , 2014). The results show that the asymmetry assumption is valid for the long term. In addition, the empirical analysis shows a negative impact of positive external debt variation and a positive impact of negative external debt variation. This suggests that economic growth is more sensitive and favorable to decreases than to increases in external debt, which in turn means that maintaining debt at relatively high levels is detrimental to Tunisian economic growth.

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  • Rima Aloulou & Maha Kalai & Kamel Helali, 2023. "The symmetric and asymmetric impacts of external debt on economic growth in Tunisia: evidence from linear and nonlinear ARDL models," SN Business & Economics, Springer, vol. 3(7), pages 1-28, July.
    • Handle: RePEc:spr:snbeco:v:3:y:2023:i:7:d:10.1007_s43546-023-00482-9
    DOI: 10.1007/s43546-023-00482-9
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    More about this item

    Keywords

    External debt; Economic growth; ARDL; NARDL;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • 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

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