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- Title
THE IMPACT OF EXTERNAL DEBT ON ECONOMIC GROWTH IN TURKEY: AN ARDL BOUNDS TESTING APPROACH.
- Authors
GENÇ, Murat Can
- Abstract
Developing countries can choose the way of having external debt to positively affect their economic development and growth. However, not using the external debt effectively and choosing the way of having external debt during its repayment might affect the economic growth negatively. This paper attempts to analyze the effect of external debt on economic growth in Turkey, utilizing annual data for the period 1971-2011. In the paper, the existence of the long run equilibrium relationship between economic growth and external debt is investigated by applying the bounds test approach to cointegration developed by Pesaran et al. (2001). The findings obtained from long-run analysis reveal that the external debt has a negative and statistically insignificant effect on economic growth. On the other hand, the results of error correction model show that the external debt, in the short run, has a negative and statistically significant effect on economic growth. The significance of these empirical results is that the external debt did not affect the economic growth in the long run while the external debt which was not used in effective areas affected the economic growth negatively in the short run.
- Subjects
EXTERNAL debts; ECONOMIC development; TESTING; COINTEGRATION; EQUILIBRIUM
- Publication
Paradoks: The Journal of Economics, Sociology & Politics, 2015, Vol 11, Issue 1, p65
- ISSN
1305-7979
- Publication type
Article