Publication Type
Journal Article
Version
publishedVersion
Publication Date
2003
Abstract
Less developed countries (LDCs) have seen considerable business cycles in recent decades. At the same time they have significantly increased their external-debt-to-GDP ratios. It seems natural to suspect that increased indebtedness and the amplified cycles are linked. The paper presents a simple macroeconomic model to formalize this connection. External debt is the novelty of this model. The paper's main contribution is to calibrate the dynamic parameter using the World Development Indicator. It is found that the LDC dynamic behavior is generally non-oscillatory. Alarmingly though, the dynamic convergent system in the 1970s has been replaced by one of divergence.
Keywords
Developing countries, Debt, Business cycles
Discipline
Finance
Research Areas
Econometrics
Publication
Journal of Economic Studies
Volume
30
Issue
2
First Page
155
ISSN
0144-3585
Identifier
10.1108/01443580310465367
Publisher
Emerald
Citation
LEUNG, Hing-Man.
External Debt and Worsening Business Cycles in Less Developed Countries. (2003). Journal of Economic Studies. 30, (2), 155.
Available at: https://ink.library.smu.edu.sg/soe_research/150
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1108/01443580310465367