Seybold Report ISSN: 1533-9211
Teaching assistant Mohammad Mahfoz Faqiri1
Faculty of Economics, Parwan University, Charikar, Parwan, Afghanistan
Teaching assistant Mohammad Omar Lutfy2
Faculty of Economics, Parwan University, Charikar, Parwan, Afghanistan
Teaching assistant Mursal Majeedi3
Faculty of Economics, Parwan University, Charikar, Parwan, Afghanistan
Vol 17, No 09 ( 2022 ) | DOI: 10.5281/zenodo.7089084 | Licensing: CC 4.0 | Pg no:1073-1087 | Published on: 17-09-2022
Abstract
According to the economic theories and all case studies conducted at the national and international level, government debt has been mentioned as one of the important and fundamental factors on economic growth. This study aims to examine the impact of external debt on economic growth in Afghanistan in a period of 2006-2019 with the objective of explaining the effects of government debt on the economic growth of Afghanistan using the ARDL method, to investigate the effect of government debt on the economic growth of Afghanistan. In the process of doing so, it assesses the empirical co-integration, long-run and short-run dynamics of the concerned variables for the mentioned period, applying the autoregressive distributed lag (ARDL) bounds testing approach to co-integration. The results show that government debt in the long term and also in the short term has positive and significant effects on Afghanistan's economic growth, such that in the long term, with a 1% increase in government debt, the GDP increases by 4.774081 %, but in the short term, with a 1% percent increase in government debt, the GDP increases by 1.080462 percent. the coefficient of the error correction model in this analyze is equal to -0.150633 and it shows that in case of any deviation from its long-term relationship in one period (each quarter), 15 % of this deviation is adjusted in the next period and towards the relationship a long-term equilibrium moves by itself.
Keywords:
Government Debt, Economic Growth, Inflation Rate, Foreign Direct Investment, ARDL Method.