 Assessing Growth Impact of Public Debt in Sri LankaSuvra Prokash Mondal and Biswajit Maitra Arthaniti: Journal of Economic Theory and Practice, 2021, vol. 20, issue 2, 201-226 Abstract: Whether public debt spurs economic growth is an unsettled issue in both theoretical and empirical grounds. The issue has attracted lots of attention to economists and policymakers in recent times. This article addresses the debt–growth issue in the case of a small emerging south Asian country—Sri Lanka. The impact of external, domestic debt, in association with a set of financial variables on income, is assessed for an extended period of 1965–2017, and also for the post-reform period of 1978–2017. The article finds some robust evidence that external debt is not beneficial; rather it depresses income. The impact of domestic debt and foreign aid on income is trivial. On the other hand, gross fixed capital formation and money supply spur income growth, whereas the impact of openness to trade is dismaying, and all these findings are invariant across the extended period and the post-reform periods. The results have policy implications for the long-term sustained economic growth of Sri Lanka. JEL: H63, F35, O40, C22 Keywords: External debt; domestic debt; gross fixed capital formation; income growth; trade openness; money supply (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:sae:artjou:v:20:y:2021:i:2:p:201-226 Access Statistics for this article More articles in Arthaniti: Journal of Economic Theory and Practice |
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