Impact of Public Debt Burden on Economic Growth of...

Impact of Public Debt Burden on Economic Growth of Bangladesh: A VAR Approach Md. Hashibul Hassan Lecturer Department of Finance Jagannath University Dhaka, Bangladesh. Email: hashibulhassan@yahoo.com Tahmina Akhter Lecturer Department of Finance University of Dhaka Dhaka, Bangladesh. Email: tahmina25@gmail.com Impact of Public Debt Burden on Economic Growth of Bangladesh: A VAR Approach Abstract Bangladesh is relying heavily on public debt to meet the budget deficit since its independence. In this paper, the objective is to find out whether the government of Bangladesh is excessively borrowing from the public sources and thus negatively affecting the economy of the country. For this purpose GDP growth rate (GDP), manufacturing sector†¦show more content†¦However in Bangladesh very few studies have been done using the Vector Auto-regressive model, to identify the impact of public debt burden on the economic growth of the country. Fosu (1996) investigated the debt overhang hypothesis by studying 13 severely indebted countries- Zambia, Venezuela, Sierra Leone, Philippines, Peru, Morocco, Mexico, Kenya, Honduras, Egypt, Ivory Coast, Argentina and Algeria. The sample period was 1971 to 1991 and the author used OLS estimation method for panel data. The author found the negative and robust relationship between investment and external debt. Qureshi amp; Ali (2010) analyzed the impact of high public debt burden on the economy of Pakistan. The sample of the study was 1981 to 2008. From their study a vast negative impact of public debt on the economy of Pakistan had been found by the authors. Ahmed amp; Shakur( 2011) performed a research to highlight the problems created by the debt (external debt) to economic growth of Pakistan. They have used the unit root test and Johansen co-integration to analyze time series data from FY 1981 to FY 2008. The Granger Causality Vector Error Correction (GCVEC) method proved unidirectional relationship between external debt and growth rate of GDP per capita. Wijeweera, Dollery amp; Pathberya (2005), investigated the connections between external debt servicing and economic growth in Srilanka during 1952-2002 by using co-integration methodology for the long run errorShow MoreRelatedSummer Internship Report on Mutual Fund : Performance Evolution Marketing20554 Words   |  83 PagesIndia in a small way with the UTI Act creating what was effectively a small savings division within the RBI. Over a period of 25 years this grew fairly successfully and gave investors a good return, and therefore in 1989, as the next logical step, public sector banks and financial institutions were allowed to float mutual funds and their success emboldened the government to allow the private sector to foray into this area. The advantages of mutual fund are professional management, diversification