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Volume 9, Issue 6, December 2020, Page: 382-388
The Impact of National Debt on Economic Growth in Liberia: A Vector Error Correction Model
Lester Zomatic Tenny, Graduate School of Business, University of Liberia, Monrovia, Liberia
Received: Nov. 30, 2020;       Accepted: Dec. 16, 2020;       Published: Dec. 22, 2020
DOI: 10.11648/j.ijber.20200906.13      View  40      Downloads  43
Abstract
This research investigated empirically the impact of the government of Liberia (GOL) debt on economic growth from 1970 to 2020. The findings from several studies in different regions of the world present mixed result and at times, controversial results on the impact of debt on the health of a country’s economy. Its objective was to ascertain whether debt, both domestically and foreign, has an impact on economic growth in Liberia over the period of 50 years. Despite the theoretical foundation that debt stymied economic growth, the result from the analysis prove contrary to existing body of literature relative to the Liberian economy. The paper reviewed several literatures from various sources and regions to build the foundation for this work. The work used annual time series data of National debt (both domestic and foreign) and Gross domestic product (GDP) as well as annual data for revenue and expenditure for the periods under research. Data for national debt and GDP were obtained from the world development index, the World Bank and the international monetary fund while data for government revenue and government expenditure were both obtained from the fiscal outturn from the ministry of finance and development planning in Liberia. The paper established that there exists a long run relationship between national debt and economic growth in Liberia. It also established that there exist a bidirectional relationship between national debt and economic growth in Liberia.
Keywords
Economic Growth (GDP), National Debt, Government Expenditure, Government Revenue
To cite this article
Lester Zomatic Tenny, The Impact of National Debt on Economic Growth in Liberia: A Vector Error Correction Model, International Journal of Business and Economics Research. Vol. 9, No. 6, 2020, pp. 382-388. doi: 10.11648/j.ijber.20200906.13
Copyright
Copyright © 2020 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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