Public Debt and Economic Growth: Evidence from Bangladesh

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Md. Saifuddin
Md. Saifuddin
1 University of Chittagong

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Bangladesh has been relying heavily on public debt to meet its budget and balance of payment deficit since independence. This study examines how public debt in Bangladesh may influence its economic growth. For this purpose two models, Investment model and Growth model, have been used in this study. The investment model has been used to investigate the potential indirect effect of public debt on economic growth through its impact on investment. In the growth model direct relationship between public debt and economic growth has been examined. The study period is 1974 to 2014. Augmented Dickey-Fuller test has been used to diagnose whether time series data are non-stationary. A TSLS regression is run to estimate those models. The estimated results show that public debt is positively related to both investment and economic growth. The empirical findings also suggest that public debt has an indirect positive effect on growth through its positive influence on investment.

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No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

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No ethics committee approval was required for this article type.

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Not applicable for this article.

Md. Saifuddin. 2016. \u201cPublic Debt and Economic Growth: Evidence from Bangladesh\u201d. Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 16 (GJMBR Volume 16 Issue B5): .

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GJMBR Volume 16 Issue B5
Pg. 65- 73
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Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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GJMBR-B Classification: JEL Code: F43
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v1.2

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September 3, 2016

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English

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Bangladesh has been relying heavily on public debt to meet its budget and balance of payment deficit since independence. This study examines how public debt in Bangladesh may influence its economic growth. For this purpose two models, Investment model and Growth model, have been used in this study. The investment model has been used to investigate the potential indirect effect of public debt on economic growth through its impact on investment. In the growth model direct relationship between public debt and economic growth has been examined. The study period is 1974 to 2014. Augmented Dickey-Fuller test has been used to diagnose whether time series data are non-stationary. A TSLS regression is run to estimate those models. The estimated results show that public debt is positively related to both investment and economic growth. The empirical findings also suggest that public debt has an indirect positive effect on growth through its positive influence on investment.

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Public Debt and Economic Growth: Evidence from Bangladesh

Md. Saifuddin
Md. Saifuddin University of Chittagong

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