External Debt and its Impact on Exchange Rates in the Philippines

The exchange rate is a crucial macroeconomic factor within emerging and transition economies. External debt is a driving force for the growth of an economy. This study then aims to determine the impact of external debt on the exchange rate of the Philippines by examining the impact of external debt accumulation on the Philippines' exchange rates. The researcher applies a correlational time series analysis in order to capture the impact of external debt, debt services on external debt, and foreign reserves on the exchange rate of the Philippines within the period from 1980 to 2019. The relationships between variables based on the developed theoretical framework are analyzed through multiple regression analysis. Empirical results show that external debt and debt services positively impact the exchange rate, while foreign reserves exhibit a negative relationship. The corresponding coefficients indicate that a change in any of the independent variables will cause significant but marginal fluctuations in the exchange rate in the case of the Philippines. The author concludes that external debt encourages the growth of exchange rates in the long run in the case of the Philippines due to its positive relationship. This implies that the Philippine government should aim to focus on more efficient external debt management strategies to enhance the value of the exchange rate of the Philippine Peso relative to other countries. Accordingly, the researcher recommends that the government take the necessary means to reduce the country's external debt to better the economy.

Impact of External Debt on Economic Growth Rate: An Empirical Evidence from Pakistan

The major objective of this study is to check the effect of external debt on the GDP growth of Pakistan. For this purpose annual time series data were used for the period 1980 to 2020. Augmented Dickey-Fuller test was applied to check the stationary status of the data and the least square method was applied for the estimation of the results. For the analysis GDP growth rate was taken as a dependent variable and other variables, such as economic growth (Annual %), inflation rate (CPI %), Foreign Direct Investment net inflow (% of GDP), multi-lateral debt services (% of public and publically generated debt service), Total debt service (% of GNI), Short term debt (% of total reserves) were taken as explanatory variables. Findings revealed that the total debt and multilateral debt negatively affect the GDP growth rate, whereas, FDI and short term debt are positively associated with growth rate. It is suggested that to improve the economic growth Pakistan should focus on investment projects and there is a need to implementation better policies for foreign debt utilization

Does External Debt Service Devalue Local Currency in the Long Run? Empirical Evidence from Egypt

The aim of this study is to identify the extent to which there is an effect of external debt service on the exchange rate in Egypt in the long run, where the change in the exchange rate has great importance in changing currency value and thus affecting its function as a store of value and a standard for forward payments and then in the redistribution of income and wealth, It also has an effect on some macroeconomic variables, such as inflation, exports, imports, and thus the current account. The study examines the estimation of the long-run relationship between the external debt service and the exchange rate in Egypt in the period 1980-2019 and relies on the exchange rate of the dollar against the Egyptian pound as a dependent variable, while the explanatory variables were the external debt service, gross capital formation, broad money growth, deposit interest rate, household final consumption expenditure, gross savings, and terms of trade adjustment. The methodology is based on Vector Error Correction (VEC) and the study concluded that there is a significant long-term relationship between the value of the Egyptian pound and all the variables explained in the study, as the error correction coefficient is negative and significant. Also, there is an inverse statistically significant relationship between the value of the Egyptian pound and each of the external debt service, the deposit interest rate, and gross savings; any change of 1% in the external debt service, the deposit interest rate, and gross savings leads to a devaluation of the Egyptian pound against the dollar by 4.8%, 0.04%, and 0.05%, respectively. The study also concluded that there is a positive, statistically significant relationship in the long term between the value of the Egyptian pound and each of gross capital formation, broad money growth, households' and NPISHs' final consumption expenditure, and terms of trade adjustment, as any change of 1% in these variables leads to an increase in the value of the Egyptian pound by 0.16%, 0.05%, 0.27%, and 6%, respectively. This study recommends that decision makers consider all the reasons that would reduce the external debt service in order to preserve the value of the Egyptian currency in the long run.

International Capital Inflows and Poverty: Evidence from Developing Countries.

Poverty reduction is an important one of the long-term global goals. This paper analyses the impact of international capital inflows on poverty with a sample covering 26 developing countries in the Asia-Pacific region. A panel dataset is collected over the period of 1980-2015. The results conclude some new findings, which show international capital inflows have two kinds of effects on the poverty rate. The result shows that remittances and trade openness has positive effects on the poverty rate of the economies. On the other hand, external debt and official development assistance have negative effects on poverty in the region. Our findings lead to some valuable implications, in which, the policymakers need more careful when using the external debt as well as official development assistance to support economic growth because these tools can make the more serious on the poverty in countries. However, the policymakers can use the remittances as an important international capital to solve the lack of internal financial resource. Besides, the result points out that trade openness is a good tool for decreasing the poverty rate by trading with the outside.

Macroeconomic Factors Determining the Growth of Pakistan

This study attempts to explore the relation ofExternal Debt, Terms of Trade, Education,Military expenditures, Consumer Price Index, and GrossDomestic Production of Pakistan throughout 1997-2019. Toestimate the targeted objectives of this research AutoRegressive Distributive Lags (ARDL) technique was used. Theresults revealed some facts that Military expenditures andeducation were essential to achieve the goal of the high growthrate of the economy in the form of Gross Domestic Production.So policymakers should adopt strong strategies. Educationshould be as skilled and technical as possible and producemilitary equipment to save foreign exchange. CPI, TOT, andExd should be properly regulated because of their negativeimpact on GDP. CPI affects the people, so fiscal policy shouldbe adopted. Without external debt, governments feel helpless,so breaking this trap is essential for dignity and development.The model has a dampening convergence towards equilibrium

The impact of external debt on total factor productivity and growth in HIPCs: non-linear regression approaches

Purpose The purpose of this study is to provide an empirical analysis of the impact of external debt on total factor productivity (TFP) and growth along with the TFP channel through which external debt affects the growth of heavily indebted poor countries (HIPCs). Design/methodology/approach This study uses panel data econometrics; basically, the seemingly unrelated regression (SUR) and alternative non-linear (panel threshold) models. For robustness check, it also uses panel-corrected standard errors, feasible generalized least squares and SUR (using alternative variables). Findings External debt significantly reduces both TFP and growth. Besides, it confirms that the relationship between external debt and TFP and gross domestic product growth is non-linear. Further external debt can affect the growth of HIPCs through the TFP channel. However, the threshold model result reveals weak evidence of threshold values although there are some threshold values of 67 and 54 for TFP and growth models, respectively. Originality/value To the best of the authors’ knowledge, this is the first study on most concerned countries (HIPCs) that shows a detailed and complete analysis of the TFP channel and the impact of external debt on growth. Thus, it provides appropriate and sound policies that consider the unique characteristics of the countries. Unlike most previous findings, this study does not support an inverted U-shape relationship between external debt and growth. Further, it provides insights into the relationships among TFP, external debt and growth. Moreover, it considers basic panel econometric tests like cross-sectional dependence, uses a non-linear simultaneous equations model along with the alternative non-linear model and is supported by different robustness checks.

How Singapore’s Sovereign Debt Risk Has Changed from 2016 to 2021

In this paper, I build an economic model and adapt it to fit Singapore’s economic and historical background. My empirical analysis is based on data about external debt to GDP, foreign investment, and net export products and partners. But I also address concerns about risk factors coming from covid and the oil crisis. In my analysis, even in the worst case, Singapore is not going to be worse than the Netherlands in the IIR rating, which corresponds to an IIR rating of 90. In contrast to my baseline, risk assessment for Singapore is a rating of 93.