We found a match
Your institution may have rights to this item. Sign in to continue.
- Title
Foreign Debt, Exchange Rate, Inflation and Economic Growth: A Co-integration and Causality Analysis.
- Authors
Khan, Zafir Ullah; Zubair, Muhammad; Khan, Amin Ullah; Talal, Muhammad
- Abstract
Pakistan is grappling with a significant debt crisis and seeking assistance from the IMF and allied nations to alleviate the situation. This has aroused the interest of the academic community to understand the intricacies of the debt trap and explore potential solutions. This study examines how foreign debt affects the economic growth of Pakistan by analyzing selected macroeconomic variables for the period 1990-2020. The results of dynamic autoregressive distributed lag models show that Pakistan's economic growth performance is significantly and adversely impacted by debt servicing and exchange rate fluctuations. From the Granger causality results, it is evident that there is a neither unidirectional nor bidirectional causal relationship between GDP and foreign debt. This rejects the notion of a direct relationship between the two, as proposed by previous studies. The study also finds that foreign debt negatively affects the economic performance of Pakistan's economy via its effects on inflation, exchange rate and debt servicing. The paper offers useful policy recommendations.
- Subjects
PAKISTAN; EXTERNAL debts; PRICE inflation; ECONOMIC development; MACROECONOMICS
- Publication
Journal of Applied Economics & Business Studies (JAEBS), 2023, Vol 7, Issue 1, p27
- ISSN
2523-2614
- Publication type
Article
- DOI
10.34260/jaebs.712