The Effects of Public Debt on Economic Growth in Bangladesh: An Evidence from the ARDL Bound Testing Approach
Journal: International Journal of Economics and Financial Research (Vol.6, No. 5)Publication Date: 2020-05-15
Authors : Kazi Mezbah Uddin Ahamad; Mominul Islam;
Page : 87-95
Keywords : Economic growth; Public debt; Gross capital formation; Debt service.;
Abstract
Public debt is intended to bridge the gap between domestic savings and investment. This paper examines the effect of public debt on economic growth in Bangladesh using autoregressive distributed lag bound testing approach to cointegration. It finds a negative relationship between public debt and economic growth both in the short-run and the long-run. That is, a significant rise in the public debt in Bangladesh appears to be a burden for the economic growth controlling for other determinants of growth. The findings suggest that funds obtained through public debt are not utilized in the productive economic avenues which may improve the growth scenario in Bangladesh. Also, the adverse effect exerted by public debt may further be responsible for a reduction in investment and slower growth of capital stock, which eventually can hamper the labour productivity growth in the country in long run.
Other Latest Articles
- Liquidity Analysis of UAE Banks
- Risk Velocity and Financial Markets Performance: Measuring the Early Effect of COVID-19 Pandemic on Major Stock Markets Performance
- Can Monetary Policy Prevent Financial Crises?
- Macroeconometric Assessment of Monetary Approach to Balance of Payments in a Small Open Economy: The Nigeria Experience
- Overconfidence: The Influence of Positive and Negative Affect
Last modified: 2020-06-22 22:35:10