Open AccessTHE RELATIONSHIP BETWEEN EXTERNAL PUBLIC DEBT AND ECONOMIC GROWTH: AS A CASE OF UZBEKISTAN
Author(s) -
Akmal Allakuliev,
Fayzullokh Sattoriy
Publication year - 2022
Publication title -
epra international journal of research and development
Language(s) - English
Resource type - Journals
ISSN - 2455-7838
DOI - 10.36713/epra9813
Subject(s) - cointegration , economics , debt , debt overhang , external debt , monetary economics , debt to gdp ratio , recession , debt levels and flows , error correction model , internal debt , real gross domestic product , macroeconomics , econometrics
This study investigates the relationship between external debt and economic growth in the Uzbekistan during the period 2010–2020. Two-step Engle and Granger Cointegration method is employed to determine the cointegration relationship between external debt and GDP growth. Our findings show that there is a negative significant relationship between external debt and economic growth. We can also observe that a 1% increase in external debt will lead to a 24% decrease in GDP growth. Also the results of ECM model suggests that if economic shocks and periodic downturn occur in GDP as a result of external debt, then 86.0% will return to its equilibrium in each subsequent short period. This suggests that GDP growth may return to its equilibrium after a period of 1.17 (1/86) from debt crisis and shocks.KEYWORDS: economic growth, cointegration, debt overhang, external public debt, error correction model.