Impact of domestic debt on economic growth: an empirical investigation of Sri Lanka from 1960-2014
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Date
2016-11-05
Authors
Selvamalai, T.
Abhayaratne, A.S.P.
Journal Title
Journal ISSN
Volume Title
Publisher
University of Peradeniya
Abstract
The main objective of the study is to identify the effects of domestic debt on economic growth in the short-run and the long-run in Sri Lanka. The study has used annual time series data for the period from 1960-2014 which were gathered from the Annual Report of the Central Bank of Sri Lanka, 2014. To analyze the data, the study used the time series econometric techniques of co-integration, distributed lag model, and Granger causality test. The study found that (i) there is no long-run equilibrium relationship between domestic debt and real value of GDP, (ii) in the short-run, domestic debt as a percentage of GDP has had a negative and significant effect on the economic growth(iii), in the long-run, domestic debt as a percentage of GDP does not have any significant impact on economic growth, (iv) there is no causal relationship between domestic debt as a percentage of GDP and economic growth in Sri Lanka between 1960 and 2014.
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Keywords
Domestic debt