scholarly journals A Different Perspective Analysis of the Effects of Economic Growth and External Debt on the Current Account

2019 ◽  
Vol 3 (1) ◽  
pp. 233-250
Author(s):  
Emrah Türk
Keyword(s):  
Economic Growth ◽  
Current Account ◽  
External Debt ◽  
Perspective Analysis ◽  
The Current Account

The Impact of Current Account Deficit on Economic Growth: An ARDL Approach

2020 ◽  
Vol 21 (1) ◽  
pp. 76-92
Author(s):  
Tamma Reddy ◽  
T. Sita Ramaiah
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Current Account ◽  
Unit Root ◽  
Current Account Deficit ◽  
External Debt ◽  
Unit Root Test ◽  
Output Growth ◽  
The Impact ◽  
The Current Account

In this study, we examine the linkages between External debt, Exchange rate, Current account deficit, and GDP at Factor cost for India over the period of 1975-76 to 2018- 19 using the Unit root test and Autoregressive Distributed Lag (ARDL). The results of the unit root test reveal that GDP growth rate and External debt are integrated at the level I(0); while the Current Account deficit and Exchange rate are integrated at first order I(1). The results of the ARDL technique reveal that the current account deficit has a positive and significant impact on Real GDP. It clearly reflects the role of imports in accelerating the growth of a developing economy like India. There is also evidence that the external debt has a positive and significant impact on the Current account deficit while the Exchange rate does not have an impact on the Current account deficit. The authors opine that the external debt assists in a gradual reduction in the current account deficit and contributes to economic growth by narrowing down the saving-investment gap. As the demand for Indian exports is inelastic in the global market, the country has not benefitted from the depreciation of its currency. The authors stressed the need for focusing on further diversification of its export markets, creating a conducive environment for attracting longer-term FDIs, liberalization, promoting commercial services exports, and achieving exchange rate stability in the context of the USA-China trade war and stagnation in the world output growth. Huge untapped potential for IT-enabled services should be exploited to promote service trade. The authors point out the current account deficit in the range of 2-3 percent of GDP can be manageable.

scholarly journals Romania

2019 ◽  
Vol 19 (278) ◽  
Author(s):  
Keyword(s):  
Economic Growth ◽  
Current Account ◽  
Investor Sentiment ◽  
Domestic Policy ◽  
Medium Term ◽  
Fiscal Deficits ◽  
Fiscal Stimulus ◽  
Eu Countries ◽  
Macroeconomic Imbalances ◽  
The Current Account

Economic growth has remained strong, raising people’s incomes towards those in advanced EU countries. However, macroeconomic imbalances have become increasingly evident: the current account and fiscal deficits have been widening and inflation pressures are building. Economic growth is expected to stay above potential in 2019 on the back of continued fiscal stimulus, but slow down over the medium term due to faltering investment and reforms. The growing imbalances are eroding policy room for maneuver and increasing the risk that the convergence with EU could suffer a setback, triggered by domestic policy excesses or swings in global investor sentiment.

scholarly journals Current Account Balance in Emerging Asia

2021 ◽  
Vol 16 (1) ◽  
pp. 12-25
Author(s):  
Kivanç Halil Ariç ◽  
Siok Kun Sek ◽  
Miguel Rocha de Sousa
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Current Account ◽  
Causal Effect ◽  
Panel Data Analysis ◽  
Government Expenditure ◽  
Current Account Balance ◽  
Important Indicator ◽  
Long Run ◽  
The Current Account

Abstract The current account balance is an important indicator which reveals information on a country’s economic situation such as investments, capital flows, and indebtedness. The main purpose of this study is to examine the current account balance conditions in emerging Asian countries. In this respect, the long-run and causality relationship between current account balance, economic growth, government expenditure, real interest rates, and foreign direct investment was examined. The panel data analysis was applied using the data dated 1986 to 2015. Our results revealed a causal effect from economic growth and government expenditure to current account balance mainly dependent on saving tendency.

scholarly journals The Reasons for Additional Growth Limit of Consumer Non-Purpose Loans in the Banking Sector of Bosnia and Herzegovina

2018 ◽  
Vol 15 (26) ◽  
Author(s):  
Dragan Jović
Keyword(s):  
Economic Growth ◽  
Current Account ◽  
Banking Sector ◽  
Current Account Deficit ◽  
Point Of View ◽  
Current Account Balance ◽  
Economic Point ◽  
Consumer Loans ◽  
Growth Limit ◽  
The Current Account

The growth in consumer non-purpose loans leads to the reduction in BiH current account balance and amplifies the current account deficit. According to regression models, the commercial loan has the same effect on the current account. However, in dynamic VAR models, a commercial loan has, either neutral influence on the current account balance, or contributes to its mild growth. A commercial loan is necessary for BiH economy, because the private sector is the main factor of the economic growth, while a consumer non-purpose loan generates mainly demand for import. When a credit growth is very low, the credit is economic and not free good and additional need for the direct regulation of credit appears, especially in countries with underdeveloped financial market. The share of private companies in the credit distribution is reduced and from the economic point of view, redistribution of loans can be made only at the expense of consumer loans. Additional growth limit on the consumer non-purpose loan, which is composed of 74.2% of total consumer loans, and 34.9% of all bank’s loans (10/2016), is one of the preconditions for the decrease of current account deficit, economic growth and economic development acceleration.

scholarly journals Public Debt, Current Account Deficit and Economic Growth: A Study on Indian Context

2020 ◽  
Vol 9 (3) ◽  
pp. 594-601
Keyword(s):  
Economic Growth ◽  
Current Account ◽  
Public Debt ◽  
Current Account Deficit ◽  
External Debt ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
The Impact ◽  
Internal Debt

External debt and internal debt form main components of the public debt structure in India. India’s debt profile shows increasing external debt and simultaneously increasing the deficit in current account which have impact on economic growth of India. Our study assesses the impact of India’s Gross External Debt (GED), Internal Debt (IND) and Current Account Deficit (CAD) on economic growth (GDP) by using time series data from 1998-99 to 2018-19. We intend to find long-run as well as short run relationship between the variables with the help of Eviews software. Stationarity of data is tested by considering Augmented Dickey-Fuller (ADF) test statistics and used Johansen Co-integration test and Vector Error Correction Model (VECM). The result shows co-integration among the variables with one equation. The result of VECM shows existence of long-run relationship among the variables. But the study fails to find the short-run causality among the variables. The results show external debt (GED), internal debt (IND), and Current Account Deficit (CAD) have negative and statistically insignificant relationship with GDP. It shows increase in public debt and deficit in current account results in decrease in GDP growth.

scholarly journals Export-Led Growth Model and External Debt in Turkey

2017 ◽  
Author(s):  
İlkay Noyan Yalman ◽  
Özcan Işık ◽  
Şerife Merve Koşaroğlu
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Trade ◽  
Growth Model ◽  
Current Account ◽  
Current Account Deficit ◽  
External Debt ◽  
Time Series Model ◽  
Causality Analysis ◽  
Turkish Economy

After the 1980s, as the globalization movement accelerated, countries increased their foreign trade transactions. In with this process, import-based growth model was abandoned in the Turkish economy and an export-based growth model is adopted. The export-led growth model increased export revenues started to, growth has gained speed, however, due to fact that the industry is dependent on imported inputs, started to increase external balance and current account deficit problems. In addition, there have economic growth that is not create employment due to insufficient savings and investments. For this reason, the increase in external debt tended to increase further. Such causes have led to an increase in external debt. In this study, the effect of export-led growth on foreign debts will be analyzed. For this purpose, foreign debts and growth relation in Turkey will be analyzed with time series model and will be done causality analysis.

scholarly journals Longing for economic growth without current account deficit: Chinese model

2016 ◽  
Vol 13 (3) ◽  
pp. 3927 ◽  
Author(s):  
Deniz Züngün
Keyword(s):  
Economic Growth ◽  
Current Account ◽  
Current Account Deficit ◽  
Current Account Balance ◽  
Causality Test ◽  
Economic Growth Rate ◽  
Chinese Model ◽  
Foreign Countries ◽  
Global Fluctuations ◽  
The Current Account

After 1978, China implemented some reforms and branched out to foreign countries. China, applying a strategy based on export and keeping its domestic currency, Yuan, in balance during this process, has increased its economic growth. However, current value increase in dollar and global fluctuations has also affected the growth in China. Considering the fact that growth and current account balance is one of the most important variables of a nation, it is an issue of concern how the decreasing economic growth rate of China in 2015, compared to previous years, will affect the current account balance. Thereby, this study examines the effect of Chinese growth, with the application of export based industry strategy, on the current account balance between the years of 2000-2015. As a result of the study, a bidirectional relation is determined with Granger Causality Test between economic growth and current account balance. During the Regression Analysis, it is ascertained that 1% of increase in economic growth will incur 0.32% of increase in current account.

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