Currency depreciations in emerging economies: A blessing or a curse for external debt management?

Fisera, Boris; Tiruneh, Menbere Workie; Hojdan, David

doi:10.1016/j.inteco.2021.09.003

Cited by 9 publications

(6 citation statements)

References 84 publications

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“…Previous studies suggested there is a positive relationship between the exchange rate and debt. This means that depreciation leads to a higher level of external debt, especially when the level of depreciation is large and the debt is denominated in a foreign currency (Alam & Taib, 2013;Fisera et al, 2021). However, in our work, the exchange rate was empirically found to have a significant negative relation to public debt.…”

Section: Resultsmentioning

confidence: 49%

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Nonlinear Analysis of Growth’s Effect on Debt: Finding the Threshold

Triwibowo,

Oktaviani,

Nurfika

2024

J. Indones. econ. bus. (Online)

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Introduction/Main Objectives: This paper explores the nonlinear effect of economic growth on the accumulation of public debt for groups of countries, based on their income levels, by finding its threshold estimator. Background Problems: The existing literature has discussed the debt's effect on growth intensively. Thus, empirical analysis to observe the inverse relationship between both variables is needed. Novelty: This paper confirms the negative and nonlinear impact of economic growth on public debt, and finds the threshold levels of economic growth on debt in high-income countries (HIC) and low-and middle-income countries (LMIC). Research Methods: We employed OLS panel regression with data covering 62 countries from 1970 to 2015. The fixed-effect panel threshold model is used to estimate the threshold level of economic growth that affects debt accumulation. Finding/Results: We found that economic growth reduces the public debt in the long run. In HIC, we find two threshold levels of economic growth, at 2.92% and at 8.41%. Moreover, in LMIC, a single threshold is found at 11.61%. Conclusion: It is proven that maintaining robust economic growth could reduce debt accumulation in the long run, the magnitude of the impacts varies between HIC and LMIC.

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Section: Resultsmentioning

confidence: 49%

“…If the volume effect of depreciation, i.e. the improvement in exports, was sufficient to offset the negative impact of rising import prices; the government would collect more revenue from export duty and could increase its fiscal capacity and reduce its dependency on external debt (Fisera et al, 2021;Greenidge et al, 2010).…”

Section: Resultsmentioning

confidence: 99%

Nonlinear Analysis of Growth’s Effect on Debt: Finding the Threshold

Triwibowo,

Oktaviani,

Nurfika

2024

J. Indones. econ. bus. (Online)

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“…While the government does not actually use up budget to cover these implicit subsidies, it does miss out on a potentially important source of tax revenue (IEA, 2020). 6 Energy security is an issue for Georgia. The country was at war with Russia, one of its two largest suppliers of oil and gas, in 2008.…”

Section: A the Residential Electricity Market In The Republic Of Georgiamentioning

confidence: 99%

“…About a quarter of its hydropower capacity is run- 5 Levan Pavlenishvili of the International School of Economics at Tbilisi State University (ISET), personal communication, September 2021. 6 The implicit subsidies for natural gas supplied to the residential sector and for electricity were about 1.1% and 0.5% of GDP in 2017, or about 6.7% of budget spending for that year (IEA, 2020). of-river, and the associated generation is subject to seasonal fluctuations.…”

Section: A the Residential Electricity Market In The Republic Of Georgiamentioning

confidence: 99%

“Wild” tariff schemes: Evidence from the Republic of Georgia

2022

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“…Empirical studies assert countries with low FI management frequently experience fund leakages from public sources through certain loopholes, such as illegal financial flows, trade misinvoicing, tax fraud, and money laundering, while strong FI management can limit fund leakages from the channels (Fisera, Tiruneh & Hojdan, 2021;Ortega, Sanjuán & Casquero, 2019). Transparent and leakage-free national and international transaction helps keep the money transparent and help to implement economic policies through the proper use of the public fund according to the projected trajectory (Osadume & Imide, 2022;Slama & Gueddari, 2022).…”

Section: Introductionmentioning

confidence: 99%

Impact of External Debt and Financial Integrity Management on Economic Growth in Developing Countries: Evidence from the MMQR Approach

Musa¹,

Ali²,

Said³

et al. 2022

APMAJ

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The study examined the impact of external debt on economic growth in the context of developing countries. Since the level of financial integrity plays a vital role in the growth factor, we also investigated the direct impact of financial integrity (FI) management on economic growth as well as the moderating role of FI on the nexus between external debt and economic growth. To achieve the goals, we deployed a newly developed econometric approach, the Method of Moment Quantile Regression (MMQR), considering the quantile in both scale and location due to highly heterogeneous panel data from 1990 to 2020. The empirical estimation of the MMQR approach demonstrated that external debt is counterproductive in all quantiles for economic growth in the context of developing countries. Besides, FI management was insignificant in the bottom to top quantiles. Besides, the results also depicted that external debt works better for economic growth by the presence of FI in upper quantiles than the lower quantiles. The findings indicated that external debt is detrimental to economic growth in developing countries, while financial integrity management supports the debt-growth relationship. The study provides several policy implications. Keywords: external debt, economic growth, MMQR, financial integrity, developing countries

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Currency depreciations in emerging economies: A blessing or a curse for external debt management?

Cited by 9 publications

References 84 publications

Nonlinear Analysis of Growth’s Effect on Debt: Finding the Threshold

Nonlinear Analysis of Growth’s Effect on Debt: Finding the Threshold

“Wild” tariff schemes: Evidence from the Republic of Georgia

Impact of External Debt and Financial Integrity Management on Economic Growth in Developing Countries: Evidence from the MMQR Approach

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