Economic debt and its impact on per capita output: an econometric analysis with panel data

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Published: Feb 5, 2022

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Mishel Piña
Carrera de Economía, Universidad Nacional de Loja, Loja, Ecuador
Pablo Ponce
Carrera de Economía, Universidad Nacional de Loja, Loja, Ecuador

Abstract

There are several determinants of the economic growth of a country, among the most prominent is the public debt, on which the availability of public resources of a country is examined. The objective of this research is to study the effect of the total external debt in relation to the per capita product at a global level and by group of countries. We use data from the World Development Indicators during 1990 - 2016. We apply the Hausman (1978) test to choose between a fixed or random effects model, a series of tests to determine the stationarity of the data, and we also estimate the strength of the vector of cointegration with the Dynamic Ordinary Least Squares (DOLS) model and a Dynamic Panel Ordinary Least Squares (PDOLS) model. The results found indicate the existence of a balance in the short and long term. The strength of the vector is weak in the PIEA and PIA, however, the relationship between the two variables is positive and statistically significant in most of the countries. Our policy implications are aimed at establishing an official body to constantly estimate and report on the average debt/GDP ratio for each economy according to the factors specific to each country so that they achieve fiscal sustainability. In addition, to monitor the fiscal policy implemented by each country and analyze its temporal consistency.

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How to Cite
Piña, M., & Ponce, P. (2022). Economic debt and its impact on per capita output: an econometric analysis with panel data. Revista Económica, 9(2), 123–134. Retrieved from https://revistas.unl.edu.ec/index.php/economica/article/view/1215
Issue
Vol. 9 No. 2 (2021): RVE Vol 9 (July - December 2021)
Section
RESEARCH ARTICLES
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