The relationship between Turkey’s foreign debt and economic growth: an asymmetric causality analysis

ABSTRACT

Tackling foreign debt that arises as a result of limited and ineffective use of resources is an item that remains on the agenda particularly for developing countries. In this study, we examine the foreign debt debates to date in terms of economic growth and using the time series for the period 2003Q1 to 2017Q1. We used unit root tests to determine the maximum integration degree of series, and we conducted causality analysis. We found a causality relationship between net foreign debt stock and economic growth in causality analyses performed for Turkey. The empirical results of this study indicate that there is a causality relationship, including both positive and negative aspects, between net foreign debt stock and economic growth. The results of our testing showed a significant causal relationship between the variables.

KEYWORDS:

• Foreign debt
• economic growth
• asymmetric and asymmetric causality

JEL CLASSIFICATION:

• F34
• F43
• O01
• O47

Disclosure statement

No potential conflict of interest was reported by the authors.