Panel unit root •Stationary Properties
Panel ARDL
•Panel
Autoregressive Distributed Lag
Dynamic heterogeneous panel model •MG,
•PMG
•DFE
Foreign debt related issues have never been resolved for developing economies. One of The adverse effect of foreign debt on economic performance is through the liquidity constraint effect referring the impact of debt service.
PMG MG DFE
Coef. Std. Err Coef. Std. Err Std. Err
Panel A: Long -run coefficients
LNGDPCAP 0.366*** 0.053 0.054 0.547 -0.073 0.117 LNEXPORT -0.367** 0.173 -1.683 1.292 -0.640 0.515 LNIMPORT -0.730*** 0.269 -0.459 1.046 -0.373 0.621 LNREER 0.711*** 0.187 -2.340 1.263 -0.515 0.392
INF -0.013*** 0.002 -0.021 0.017 0.003 0.001
LNTOT -1.188*** 0.346 0.933 1.267 -0.418 0.367
CAPIN -0.059*** 0.010 0.063 0.020 0.028 0.020
Constant 1.706 0.567 9.408 6.036 3.288 1.064
Hausman test1
PMG or MG
Chi2=
7.88 Prob>chi2 = 0.3433 (PMG > efficient)
RESULTS CONTINUED
REFERENCES
CONCLUSIONS
For the long run impact in high external debt burden countries, external shocks have significant effect on debt servicing difficulties. External shocks implies negative impact on debt servicing but GDP per capita implies positive impact on debt servicing difficulties. The study for short run effect shown there are none of the variables have significant impact on debt servicing. Generally the determinants of debt servicing with significant negative impact should be controlled to enhance the macroeconomics stability.
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2. Harrod, R.F., (1939). An essay on dynamic theory. The Economic Journal, 14-33.
3. Kharas, H., (1984). The long run creditworthiness of developing countries. Theory and Practice. The quarterly Journal of economics, 415- 439.
4. Lahiri, A., and Dinh, H.T(1996). External debt and creditworthiness: theory with evidence. Finnish Economic Papers, 9(2),110-125.
5. Pesaran, M.H., Shin, Y., & Smith, R.P (1999).Pooled mean group estimation of dynamic heterogeneous panels. Journal of econometrics.
68(1), 79-113.
Panel B: Short -run coefficients
LNGDPCAP -0.4775 0.3136 -0.4055 0.5493 0.1579 0.1945 LNEXPORT -0.5263 0.3416 0.6007 0.4846 -0.2451 0.2320 LNIMPORT -0.0805 0.3901 -0.2918 0.5302 -0.3023 0.2488 LNREER 0.2695 0.4348 0.1915 0.8930 -1.0744 0.3476 INF -0.0012 0.0067 0.0036 0.0024 0.0001 0.0001 LNTOT 0.4000 0.4162 -1.3727 0.6900 -0.3511 0.2428 CAPIN 0.0003 0.0130 -0.0292 0.0114 -0.0106 0.0061 Error correction -0.2640 0.0843 -0.9456 0.1309 -0.2903 0.0479
