EconPapers    
Economics at your fingertips  
 

Capital accumulation, external indebtedness, and macroeconomic performance of emerging countries

Marcos Rocha and José Luís Oreiro ()

Journal of Post Keynesian Economics, 2013, vol. 35, issue 4, 599-620

Abstract: This paper aims at presenting a nonlinear post Keynesian growth model to evaluate at the theoretical and empirical levels the relationship between external indebtedness and economic growth in emerging countries. To this end, a post Keynesian endogenous growth model is presented, in which: (1) the desired rate of capital accumulation is assumed to be a nonlinear function of external indebtedness as a share of capital stock; (2) an endogenous country risk premium is assumed to be an increasing (linear) function of external indebtedness (as a share of capital stock); (3) there is a fixed exchange rate regime and perfect capital mobility in the sense of Mundell and Fleming. The main theoretical result of the model is the existence of two long-run equilibrium positions, one of which has a high level of external indebtedness (as a ratio of capital stock) and a low profit rate and the other has a low level of external indebtedness and a high profit rate. This means that "excessive" external indebtedness can result in stagnant growth due to its negative effect on the rate of profit. To test the effects of external indebtedness on the rate of economic growth in emerging economies, a dynamic panel is estimated to evaluate whether external debt has an effective negative influence on economic growth in emerging countries. An empirical test of demand-led growth equations with a dynamic panel for fifty-five emerging countries confirms the potential negative effects of external debt on long-term growth rates in the sample countries.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.2753/PKE0160-3477350405 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Capital Accumulation,External Indebtedness and Macroeconomic Performance of EmergingCountries (2011) Downloads
Working Paper: Capital Accumulation, External Indebtedness and Macroeconomic Performance of Emerging Countries (2010) Downloads
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:mes:postke:v:35:y:2013:i:4:p:599-620

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MPKE20

DOI: 10.2753/PKE0160-3477350405

Access Statistics for this article

More articles in Journal of Post Keynesian Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2022-09-21
Handle: RePEc:mes:postke:v:35:y:2013:i:4:p:599-620