Examining the Nexus between External Debt and Economic Growth in Bangladesh: An ARDL-ECM Approach

Imtiaz  Ahmed; Mobasshir Anjum; Md Mahmudul  Hasan; Sahabuddin Ahmed  Seikdear

doi:10.3329/iubatr.v5i1.64589

Examining the Nexus between External Debt and Economic Growth in Bangladesh: An ARDL-ECM Approach

Authors

Imtiaz Ahmed Monetary Policy Department, Bangladesh Bank
Mobasshir Anjum Chief Economist’s Unit, Bangladesh Bank, Dhaka
Md Mahmudul Hasan Research Department, Bangladesh Bank, Dhaka
Sahabuddin Ahmed Seikdear Monetary Policy Department, Bangladesh Bank, Dhaka

DOI:

https://doi.org/10.3329/iubatr.v5i1.64589

Keywords:

External Debt; Economic Growth; ARDL; Error Correction Method.

Abstract

This paper aims to examine the nexus between external debt and economic growth in Bangladesh for periods ranging from 1973 to 2019. Time-series econometric techniques of Autoregressive Distributed Lag Model (ARDL) and Error Correction Method (ECM) are utilized in empirical analysis to investigate whether short-run and long-run dynamics exist between external debt and the growth of Bangladesh. Findings derived from the analysis reveal a long-run association between external debt and Bangladesh's economic growth. The error correction method also points out long-run adjustment if any disequilibrium arises in a period in the short run. The study recommends maintaining a stable position of overseas debt and ensuring compatible investment conditions for domestic and foreign investors.

IUBAT Review—A Multidisciplinary Academic Journal, 5 (1): 26-34

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Published

2022-12-29

How to Cite

Ahmed, I. ., Anjum, M., Hasan, M. M. ., & Seikdear, S. A. . (2022). Examining the Nexus between External Debt and Economic Growth in Bangladesh: An ARDL-ECM Approach. IUBAT Review, 5(1), 26–34. https://doi.org/10.3329/iubatr.v5i1.64589