The Debt-Growth Nexus in Poor Countries: A Reassessment
25 Pages Posted: 29 Nov 2010
There are 3 versions of this paper
The Debt-Growth Nexus in Poor Countries: A Reassessment
The Debt-Growth Nexus in Poor Countries: A Reassessment
Date Written: 2007
Abstract
This paper investigates the relationship between external indebtedness and economic growth, with a particular attention to LICs, for which the theoretical arguments of debt overhang and liquidity constraint have to be reconsidered. The estimation of a growth model, with a panel of 121 developing countries, supports a negative and linear relationship between past values of the NPV of external public debt and current economic growth. This could be due to the "extended debt overhang", according to which a large indebtedness leads to misallocation of capital and discourage long-term investment and structural reforms.
Keywords: External Debt, HIPC, Debt Relief, Economic Growth
JEL Classification: O11, F34, C33, H63
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Catherine A. Pattillo, Hélène Poirson, ...
-
What are the Channels Through Which External Debt Affects Growth?
By Catherine A. Pattillo, Hélène Poirson, ...
-
External Debt, Public Investment, and Growth in Low-Income Countries
By Benedict Clements, Rina Bhattacharya, ...
-
Uncertainty, Instability, and Irreversible Investment: Theory, Evidence, and Lessons for Africa
By Luis Servén
-
From Toronto Terms to the Hipc Initiative A Brief History of Debt Relief for Low-Income Countries
By Christina Daseking and Robert Powell
-
By Jean M. Imbs and Romain G. Rancière
-
By Jean M. Imbs and Romain G. Rancière