%0 Journal Article
%T EXTERNAL PUBLIC DEBT AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM BANGLADESH, 1974 TO 2010
%A Mahmud Hasan Shah
%A Shahida Pervin
%J Academic Research International
%D 2012
%I 
%X This research paper investigates the relevance of the dependence of Bangladesh economy on external public debt. Using some econometric tools, the study is conducted to find out the effect of external public debt on economic growth from the perspective of Bangladesheconomy for the period 1974 - 2010. The study will probe debt overhang and crowding out effect of external public debt to represent the effect. To specify the debt overhang and crowding out effect of external public debt, the debt burden has been segmented into two part; external debt stock and external debt service. Long run significant negative effect of external public debt service and positive effect of external public debt stock on GDP growth have beenfound from this investigation. In short run, only external debt service has negative effect but the debt stock does not have any significant effect. Thus the investigation did not find anyevidence of debt overhang provided that there is no significant adverse effect of debt stock on GDP growth. But crowding out effect was originated from the fact that there is evidence ofadverse effect of debt service payment on economic growth for the period. As more debt stock means more service payment, the study shows a dichotomy in obtained results. So the reconciliation of debt should be prudent to optimize the growth of Bangladesh. Short rundisequilibrium in the path of long run is corrected at a good speed.
%K Crowding out effect
%K cointegration
%K debt overhang
%K external public debt
%K error correction mechanism.
%U http://www.savap.org.pk/journals/ARInt./Vol.3(2)/2012(3.2-64).pdf