Debt Accumulation and Economic Growth: Empirical Evidence from Pakistan Economy

Zeshan Arshad (), Sana Aslam, Mehak Fatima and Ayesha Muzaffar
Additional contact information
Zeshan Arshad: Department Of Economics. GC Women University Sialkot, Pakistan.
Sana Aslam: Department Of Economics. GC Women University Sialkot, Pakistan.
Mehak Fatima: Department Of Economics. GC Women University Sialkot, Pakistan.
Ayesha Muzaffar: Department Of Economics. GC Women University Sialkot, Pakistan.

International Journal of Economics and Empirical Research (IJEER), 2015, vol. 3, issue 8, 405-410

Abstract: Purpose: The study analyzes the contribution of external debt on the economic growth of Pakistan. To investigate whether the external debt has contributed to the economic growth in the long run, extended Solow growth model is used. Methodology: To test model Johnson co-integration is applied on time series data for the years1970-2014. ADF is also being applied to check the stationarity. Results disclosed, there exist negative relation between external debt and economic growth of Pakistan. With the justification of Nigerian economy in which ordinary least square method is used to establish a simple relationship between variables under study, Granger Causality test was also applied to check relation between GDP, external debt and domestic debt. Findings: Results showed that external debt has a negative impact on growth and domestic debt has a positive impact on economic growth. Domestic debt, if managed can lead to higher level of growth. Recommendations: Focus should be made on efforts to manage the debt by using them in productive activities so that the level of output will increase in the country.

Keywords: External debt; Economic growth (search for similar items in EconPapers)
JEL-codes: H6 O4 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
http://tesdo.org/shared/upload/pdf/papers/IJEER,%203_8_,%20405-410%20.pdf (application/pdf)
http://tesdo.org/journal_detail.php?paper_id=181&expand_year=2015 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ijr:journl:v:3:y:2015:i:8:p:405-410

Access Statistics for this article

International Journal of Economics and Empirical Research (IJEER) is currently edited by Dr. Muhammad Shahbaz (PhD Applied Economics)

More articles in International Journal of Economics and Empirical Research (IJEER) from The Economics and Social Development Organization (TESDO) Contact information at EDIRC.
Bibliographic data for series maintained by Dr. Muhammad Shahbaz (PhD Applied Economics) ( this e-mail address is bad, please contact ).