EXTERNAL DEBT, INSTITUTIONAL QUALITY AND ECONOMIC GROWTH

Siti Nurazira Mohd Daud

Bulletin of Monetary Economics and Banking, 2020, vol. 23, issue 2, 201-220

Abstract: This paper examines the role of institutional quality in the external debt–economic growth relationship. By taking a dynamic threshold specification to a panel data consisting of 53 countries, we find that external debt has an adverse effect on a country’s growth, while institutional quality improves it. We find that the effect of external debt on economic growth depends on the level of institutional quality. In addition, at a high level of external debt, the effect of institutional quality on growth is very small, suggesting that the adverse effect of external debt on a country’s economic growth holds true.

Keywords: External debt; Economic growth; Institutional quality; Emerging economies (search for similar items in EconPapers)
JEL-codes: C32 F34 F43 O40 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:23:y:2020:i:2d:p:221-238

DOI: 10.21098/bemp.v23i2.1173

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