Title: The Debt-Growth Nexus in Poor Countries: A Reassessment
Abstract: This paper investigates the relationship between external indebtedness and economic growth, with a particular attention to LICs, for which the theoretical arguments of debt overhang and liquidity constraint have to be reconsidered. The estimation of a growth model, with a panel of 121 developing countries, supports a negative and linear relationship between past values of the NPV of external public debt and current economic growth. This could be due to the ?extended debt overhang?, according to which a large indebtedness leads to misallocation of capital and discourage long-term investment and structural reforms.
Publication Year: 2008
Publication Date: 2008-10-01
Language: en
Type: article
Indexed In: ['doaj']
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Cited By Count: 1
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