The Debt-Growth Nexus in Poor Countries: A Reassessment

Andrea Presbitero

Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), 2008, vol. 2, No 2008-30, 28 pages

Abstract: The paper investigates the relationship between external debt and economic growth, focusing on the role played by the policy and institutional framework. Results for a panel of 114 developing countries show that the debt-growth nexus depends on institutions and policies. The Debt-Laffer curve looses statistical significance once institutional quality is controlled for and debt overhang seems to be at work exclusively in countries with sound institutions. On the contrary, external debt proves to be irrelevant for countries with weak institutions. A policy implication is that efficient debt relief policies should be tailored to country-specific characteristics and conditional to a certain level of institutional quality.

Keywords: External debt; HIPC; debt relief; economic growth (search for similar items in EconPapers)
JEL-codes: C33 F34 H63 O11 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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http://dx.doi.org/10.5018/economics-ejournal.ja.2008-30
https://www.econstor.eu/bitstream/10419/27514/1/economics_2008-30.pdf (application/pdf)

Related works:
Working Paper: The debt-growth nexus in poor countries: a reassessment (2007)
Working Paper: The debt-growth nexus in poor countries: a reassessment (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifweej:7397

DOI: 10.5018/economics-ejournal.ja.2008-30

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