 Debt and economic growth in Asian developing countriesEvan Lau, Jaime Moll de Alba and Kim-Hing Liew Economic Analysis and Policy, 2022, vol. 76, issue C, 599-612 Abstract: External debt levels have increased dramatically over the past decades. Many Asian developing countries are trapped in unprecedented levels of indebtedness while utilizing a high level of external debt for fiscal activities. This study empirically investigates the impact of such debt levels by estimating the appropriate threshold of external debt to GDP on economic growth for a sample of 16 Asian countries during the years 1980 to 2016. The outcomes indicate that external debt negatively and significantly impacts growth in most of these countries. Debt to GDP threshold construction revealed ten countries with a threshold below 30%, three countries in the range between 30%–60%, two countries in the range between 60%–90%, with only Thailand exceeding a 90% threshold. The fiscal discipline of targeting an appropriate debt to GDP ratio can serve as a guide to optimizing sustainable economic growth for countries in the Asian region. That is, appropriate ratios would allow flexibility in the use of fiscal instruments to counter any future incoming economic shocks. Keywords: Debt threshold; Asian countries; Fiscal spaces; Sustainable growth (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:76:y:2022:i:c:p:599-612 DOI: 10.1016/j.eap.2022.09.011 Access Statistics for this article Economic Analysis and Policy is currently edited by Clevo Wilson More articles in Economic Analysis and Policy from Elsevier |
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