To read this content please select one of the options below:

External debt and worsening business cycles in less developed countries

H.M. Leung (Department of Economics, School of Economics and Social Sciences, Singapore Management University, Singapore)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 1 April 2003

1973

Abstract

Less developed countries (LDCs) have seen considerable business cycles in recent decades. At the same time they have significantly increased their external‐debt‐to‐GDP ratios. It seems natural to suspect that increased indebtedness and the amplified cycles are linked. The paper presents a simple macroeconomic model to formalize this connection. External debt is the novelty of this model. The paper's main contribution is to calibrate the dynamic parameter using the World Development Indicator. It is found that the LDC dynamic behavior is generally non‐oscillatory. Alarmingly though, the dynamic convergent system in the 1970s has been replaced by one of divergence.

Keywords

Citation

Leung, H.M. (2003), "External debt and worsening business cycles in less developed countries", Journal of Economic Studies, Vol. 30 No. 2, pp. 155-168. https://doi.org/10.1108/01443580310465367

Publisher

:

MCB UP Ltd

Copyright © 2003, MCB UP Limited

Related articles