Main Article Content
The paper tries to investigate the impact of external debt on time series quarterly data spanning from 2007:02-2017:03, on various macro-economic variables and to study the existence of relationship and causality between them in India. In order to derive the results various econometric tools such as ADF unit root test, Granger Causality test and Regression Analysis have been employed in the study. The null hypothesis for the study were that External debt does not granger cause various macro-economic variables which was accepted at 5% level of significance and External debt does not have statistically significant relationship with various macro-economic variables, which was accepted in case of all variables except Inflation. Thus, it was found that no granger causal relationship was found between external debt and macro-economic variables and vice-versa. There exists no statistically significant relationship between external debt and RGDP, G-Revenue, Export, and G-Spending and they have almost no impact on the external debt. However, in case of Inflation there exists a positive statistically significant relationship that has 10.27% impact on external debt. It was concluded that External debt does not play a significant role in the economic development of India for the period of the study.
Diaz-Alejandro C. Southern cone stabilization plans, economic stabilization in developing countries. The Brooking Institution Washington DC; 1981.
Amin MAH. The impact of external debt on economic development in Sudan (1970-2011): An empirical investigation. International Journal of Economics and Finance. 2015;4(2).
Pattillo C, Poirson H, Ricci L. External debt and growth. IMF Working Paper. 2002;2(69).
Cohen D, Sach J. Growth and external debt under risk of debt repudiation. Elsevier Science Publishers B.V. ISBN: 0-444-89284-2. 1991;437-472.
Fosu AK. The external debt burden and economic growth in the 1980’s: Evidence from Sub-African Africa. Canadian Journal of Development Studies. 1999;20(2):79-120.
Clements B, Rina B, Nguyen TQ. External debt, public investment and growth in low income countries. IMF Working Paper. 2003;3(249).
Abu Bakar, Hassan S. Empirical evaluation on external debt of Malaysia. International Business and Economic Research Journal. 2008;7(2):95-108.
Adegbite EO, Ayadi FS, Ayadi OF. The impact of Nigerian external debt on economic development. International Journal of Emerging Market. 2008;3(3):285-301.
Jayaraman TK, Evan L. Does external debt lead to economic growth in pacific island countries. Journal of Policy Modeling. 2008;272-288.
Ali R, Mustafa U. External debt accumulation and its impact on economic growth in Pakistan. The Pakistan Development Review. 2012;51(4):79-96.
Rahman MM, Suman D, Bashar MA. External debt and gross domestic product in Bangladesh: A cointegration analysis. Central and European Eastern Online Library. 2012;4:36.
Mohsin N, Maria Q, Naveed WA. Does external debt causes economic growth: A case study of Pakistan. The Romanian Economic Journal. 2012;43.
Dereje AE. The impact of external debt on economic growth. Department of Economics Magisteruppasts 30hp, Varterminen; 2013.
Ochieng JB, Kiprop S, Aquilars MK, Girove M. External debt and economic growth in the East Africa community. African Journal of Business Management. 2014;8(21):1011-1018.
Unyekwelu UL, Okoye E, Ugwuanyi UB. External debts management strategies in developing economies: An impact assessment on selected economic indices of Nigeria. International Journal of Economics and Finance. 2014;6(8).
Siddique A, Selvanathan EA, Selvanathan S. The impact of external debt on economic growth: Empirical evidence from highly indebted poor countries. The University of Western Australia. 2015;15(10).
Suna K. The relationship between external debt and economic growth in Turkey. Proceedings of Second European Academic Research Conference on Global Business Economics, Finance and Banking (EAR15 Swiss Conference); 2015.
Younis AA, Taher SS, Jamal HSS. The impact of external debt on economic growth: Empirical evidence from Iraq. International Journal of Economics and Finance. 2015;4(8).
Mukesh K. Impact of foreign debt on India: An analysis. International Journal of Applied Research. 2015;1(13):575-578.