Impact of the External Debt on Standard of Living: A Case of Asian Countries.

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Date: Aug. 2022
From: Social Indicators Research(Vol. 163, Issue 1)
Publisher: Springer
Document Type: Report; Brief article
Length: 207 words

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Abstract :

Keywords: Quadratic effects; Quantile model; Panel ECM Abstract This study discusses the basic purpose of external debt: to finance poverty alleviation and bring progress in a country in a time of crisis rather than increase the burden on the economy. Several empirical studies explored the concept of optimal debt, but they often assume a particular nonlinear specification. This study examines the impact of long run and short run external debt on the living standard for selected 23 high indebted Asian countries for the time period 1980--2020. The quadratic effects of external debt are assessed using the Two-Step Panel Quantile ARDL model. This model controls the unobserved heterogeneity, serial correlation, miss-specification and non-normality to ensure robust debt effect on living standards. This study reveals diminishing returns in external debt, whereby debt will be harmful to the standard of living beyond the estimated threshold. The estimated model also proposes that small and effective debt-based policy interventions are beneficial. Author Affiliation: (1) Department of Economics, Division of Management and Administrative Science, University of Education, Lahore, Pakistan (2) Department of Economics, University of Management and Technology, Lahore, Pakistan (3) ORIC, University of Management and Technology, Lahore, Pakistan (a) noman.arshed@ue.edu.pk Article History: Registration Date: 02/15/2022 Accepted Date: 02/14/2022 Online Date: 03/02/2022 Byline:

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Gale Document Number: GALE|A713230196