The Relationship Between External Debt and Economic Growth: Empirical Evidence from Ukraine and Other Emerging Economies

Investment Management and Financial Innovations, Volume 15, Issue 1, 2018

15 Pages Posted: 18 Jun 2019

See all articles by Inna Shkolnyk

Inna Shkolnyk

Ukrainian Academy of Banking of the National Bank of Ukraine

Viktoriia Koilo

Ph.D., Associate Professor, NTNU, Norway

Date Written: April 8, 2018

Abstract

The article examines the relationship between external debt and economic growth in emerging economies for the period 2006-2016. The authors used different econometric tools, e.g., ADL model and correlation analysis. The regression results showed that the original values had no significant impact on the estimation of the parameters. Thus, there was made an assumption that emerging economies have a non-linear impact on macroeconomic parameters, including external debt that has a non-linear type of influence on economic growth. The authors established that high level of external debt, in conjunction with macroeconomic instability, impedes economic growth in such countries. The regression model also showed that there is a critical level of debt burden for emerging economies, where the marginal impact of external debt on economic growth becomes negative. The results of the study highlighted the significance of the problem of effective public debt management strategy implementation in Ukraine. This issue is predetermined by the appropriate organizational support. The study recommends improving a public external debt management model. In this paper, the authors proposed a new structure with the participation of new element -- independent agencies. The unified external debt management system should integrate all state institutions and executive power structures in this area.

Keywords: Public External Debt, Public Domestic Debt, Economic Growth, Public Debt Management, ADL Model

JEL Classification: F34, F43, H63

Suggested Citation

Shkolnyk, Inna and Koilo, Viktoriia, The Relationship Between External Debt and Economic Growth: Empirical Evidence from Ukraine and Other Emerging Economies (April 8, 2018). Investment Management and Financial Innovations, Volume 15, Issue 1, 2018, Available at SSRN: https://ssrn.com/abstract=3401197

Inna Shkolnyk

Ukrainian Academy of Banking of the National Bank of Ukraine ( email )

57, Petropavlivska str.
Sumy, 40030
Ukraine

Viktoriia Koilo (Contact Author)

Ph.D., Associate Professor, NTNU, Norway ( email )

Larsgårdsvegen 2
Alesund, 6009
Norway

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