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This paper aims to analyze the pattern of public debt in Brazil, Russian Federation, India, China and South Africa (BRICS) in a comparative perspective. Besides, an attempt is made to verify the existence of debt overhang as suggested by Krugman (1988) among BRICS nations.

Annual panel data for BRICS for the period 1980-2016 has been used for the analysis. Percentage ratio method has been used to analyze the pattern of debt. Panel covariate augmented Dickey–Fuller (pCADF) test has been used to verify the time series properties of the variable, while panel cointegration test of Pedroni (1999) is used to check the existence of any co-integrating vector among the variables. Panel Granger causality test is used to check the causality between the variables.

Co-integration result suggests that there exists a strong long-run equilibrium relationship between debt service, domestic savings, capital formation and economic growth of BRICS nations. From Granger causality test, it is observed that domestic savings and capital formation are Granger caused by debt servicing. The coefficients from fully modified ordinary least squares measure a negative impact of debt service on gross capital formation and gross domestic saving. This suggests that the payment for debt service affects capital formation and gross domestic savings adversely. Thus, it gives primary signals for debt overhang effect in BRICS nations.

Allowing debt service to negatively affect the investment and potential investment will result in slowdown or stagnation in economic growth in the long run, so strategies need to be taken in BRICS nations to check the adverse effects of rising level of debt-service-payment-to-gross national income ratio on domestic savings and capital formation. BRICS nations need to reduce their debt service payment by undertaking appropriate strategy of debt overhaul and fiscal management so that domestic savings and capital formation in the country will not be adversely affected. Besides, BRICS nations need to take measures to augment its domestic savings and capital formations.

To the best of the authors’ knowledge, no published works have analyzed the pattern of public debt for BRICS (major developing nations). Debt servicing is also not checked for BRICS in recent papers, considering overhang approach.

In theory, the impact of debt liquidity risk (DLR) on the firm's future growth is ambiguous. This study aims to examine the empirical relationship between the DLR and firms' growth rate using annual data for USA companies from 1976 to 2020.

Given the longitudinal nature of the data, the author uses OLS (ordinary least squares) regression methodology with fixed effects to control for unobserved characteristics that might affect the dependent variable. Instrument variable regression is also used to address the potential endogeneity problem.

The results show that firms having higher DLR, as proxied by more short-term debt, experience lower growth rate. An increase in firms' short-term debt decreases the firms' future growth rate as evidenced by lower assets, revenue and employee growth rate. Moreover, the authors' results show that small firms or firms with more investment opportunities grow fast if the firms take higher DLR. Finally, cyclical firms with higher DLR exhibit lower growth rate during the credit tighten period. The authors' results hold for both the pre-zero lower bound (ZLB) era and ZLB period.

To the authors' best knowledge, this is one of the earliest studies to carefully examine the effects of DLR on firms' growth rate. While prior research finds that firms with higher growth potential, measured by market-to-book (MTB) ratio, use more short-term debt, the authors' research directly addresses whether DLR affects firms' future growth rate. The authors’ findings also help explain why firms with high growth potential use more short-term debt.

This paper aims to investigate the impact of huge external debt with its servicing requirements on economic growth of the Nigerian economy so as to make meaningful inference on the impact of the debt relief which was granted to the country in 2006.

The neoclassical growth model which incorporates external sector, debt indicators and some macroeconomic variables was employed in this study. The paper investigates the linear and nonlinear effect of debt on growth and investment utilizing the ordinary least squares and the generalized least squares.

Among other things, the negative impact of debt (and its servicing requirements) on growth is confirmed in Nigeria. In addition, external debt contributes positively to growth up to a point after which its contributions become negative reflecting the presence of nonlinearity in effects.

Nigeria's external debt is analyzed in a new context utilizing a different but innovative model and econometric techniques. It is of tremendous value to researchers on related topic and an effective policy guide to policymakers in Nigeria and other countries with similar characteristics.

The purpose of this paper is to estimate benefits to debt reduction by using the natural experiment provided by the debt relief programs: the Heavily Indebted Poor Countries Initiative launched by the International Monetary Fund and World Bank in 1996 and the Multilateral Debt Relief Initiative extension in 2005.

The authors apply a time-shifted difference-in-differences strategy to evaluate the effects of this intervention. The date of each country’s decision to participate in the program is used as one treatment point while the date of the completion of the debt relief program is used as another treatment point. The exercise compares different economic outcomes such as domestic and foreign investment, schooling, and employment of the treated observations to the counterfactual of untreated country-years. The period between the decision and completion points is a short run while the period after the completion point is considered a long run.

The authors found that debt relief increased capital investment as much as 1.63 percent in the short run and 5.79 percent in the long run. However, there was no effect on foreign direct investment suggesting that debt overhang does not affect incentives of foreign investors. Output and schooling enrollment increased both in the short and long run.

This paper exploits a natural experiment of debt relief in a number of developing countries to shed light on the possible benefits to debt reduction. The authors are able to separate the short- and long-run effects of debt reduction. The finding that domestic but not foreign investment responds to debt reduction is suggestive of the differences in incentives across these two sources of investment.

The purpose of this study is to provide an empirical analysis of the impact of external debt on total factor productivity (TFP) and growth along with the TFP channel through which external debt affects the growth of heavily indebted poor countries (HIPCs).

This study uses panel data econometrics; basically, the seemingly unrelated regression (SUR) and alternative non-linear (panel threshold) models. For robustness check, it also uses panel-corrected standard errors, feasible generalized least squares and SUR (using alternative variables).

External debt significantly reduces both TFP and growth. Besides, it confirms that the relationship between external debt and TFP and gross domestic product growth is non-linear. Further external debt can affect the growth of HIPCs through the TFP channel. However, the threshold model result reveals weak evidence of threshold values although there are some threshold values of 67 and 54 for TFP and growth models, respectively.

To the best of the authors’ knowledge, this is the first study on most concerned countries (HIPCs) that shows a detailed and complete analysis of the TFP channel and the impact of external debt on growth. Thus, it provides appropriate and sound policies that consider the unique characteristics of the countries. Unlike most previous findings, this study does not support an inverted U-shape relationship between external debt and growth. Further, it provides insights into the relationships among TFP, external debt and growth. Moreover, it considers basic panel econometric tests like cross-sectional dependence, uses a non-linear simultaneous equations model along with the alternative non-linear model and is supported by different robustness checks.

The purpose of this paper is to examine whether real exchange rate devaluation improves the current account balance of four highly indebted low-income countries of East Africa.

The pooled mean group (PMG) approach is used for panel data from four countries over the period 1970–2016. The paper also applied bound testing and ARDL model for time-series data from individual sample countries.

The panel PMG/ARDL estimation result reveals that real exchange rate devaluation has no significant impact on the current account balance, both in the short and long run. However, the time-series analysis using the bound testing and restricted ARDL estimation suggests that real exchange rate devaluation improves the current account balance in the long run for only Ethiopia. The overall empirical results reveal that the current account balance would improve with the rising domestic income while it deteriorates with increasing foreign income and external indebtedness in the long run.

The paper is original.

This study aims to test the dynamic impact of public debt and economic growth on newly democratized African countries (South Africa and Namibia) and compare the findings with those of newly democratized European countries (Germany and Ukraine) during the period 1990–2022.

The methodology involves three stages: identifying the appropriate transition variable, assessing the linearity between public debt and economic growth and selecting the order m of the transition function. The linearity test helps identify the nature of relationships between public debt and economic growth. The wild cluster bootstrap-Lagrange Multiplier test is used to evaluate the model’s appropriateness. All these tests would be executed using the Lagrange Multiplier type of test.

The results signify the policy switch, as the authors find that the relationship between public debt and economic growth is characterized by two transitions that symbolize that the current stage of the relationship is beyond the U-shape; however, an S-shape. The results show that for newly democratized African countries, the threshold during the first waves was 50% of GDP, represented by a U-shape, which then transits to an inverted U-shape with a threshold of 65% of GDP. Then, for the European case, it was 60% of GDP, which is now 72% of GDP.

The findings suggest that an escalating level of public debt has a negative impact on economic growth; therefore, it is important to implement fiscal discipline, prioritize government spending and reduce reliance on debt financing. This can be achieved by focusing on revenue generation, implementing effective taxation policies, reducing wasteful expenditures and promoting investment and productivity-enhancing measures.

African countries inevitably take loans due to lack of fiscal space more so, due to the devastating effects of the coronavirus pandemic in Africa, several loans and bailouts are expected from the West. These loans come with conditions which have policy implications. This study aims at examining the impact of loans received by selected African countries from the International Monetary Fund (IMF) and World Bank during the period 1994 to 2020. The study makes use of a cross sectional panel data analysis and quantile regression models. Results indicate that IMF loans had a positively but insignificant impact on GDP whilst World Bank loans and debt service to export ratio negatively affect GDP. These finding suggest that loans are not a necessary evil in Africa but what matters is targeting debt towards growth priorities. This study recommends that policies should be put to direct the use of loans towards economic growth and sustainability in Africa.

This study examines the effect of external debt and domestic capital formation on economic development in Sub-Saharan African (SSA) economies.

Using the Dynamic Common Correlation Effects (DCCE) technique and the Driscoll and Kraay fixed-effect technique, this paper conducts a multidimensional assessment of external debt and domestic investment on economic development across a panel of 35 SSA countries from 1995 to 2018. The data utilized are sourced from the World Development Indicators (2021) and the United Nations Development Program (UNDP) database (2021).

The results reveal that domestic investment has a positive impact on economic development in SSA countries, consistent across all three dimensions of the human development index (income, education and life expectancy). However, external debt exhibits an adverse effect on economic development, consistently yielding negative outcomes for life expectancy, education and income.

Based on these findings, the authors recommend that SSA economies implement appropriate policies, such as reducing bureaucratic requirements and addressing corruption, to enhance domestic capital investment. Additionally, efforts should be directed toward channeling contracted debt into productive sectors like road construction and electricity provision.

This study is among the first to assess the impact of domestic investment and external debt on the three dimensions of human development outlined by the UNDP. Furthermore, it employs a robust econometric method that considers cross-sectional dependence (CD).

This study assessed the role of political institutions in the relationship between economic institutions and public debt in Sub-Saharan Africa.

Based on data availability, the study was done for 40 Sub-Saharan African countries from 2010 to 2019 employing generalized method of moment.

The authors documented a negative and significant relationship between economic institutions and public debt as well as a negative and significant effect of political institutions on public debt in SSA. Also, the study recorded that political institutions play a negative and significant role in the economic institutions-public debt nexus in Sub-Saharan Africa. However, a threshold of 3.691 is given when it comes to the role of political institutions in the association between government spending and public debt nexus in SSA.

The authors failed to take certain indicators of economic institutions, such as freedom to trade internationally, the size of government and legal system and property into consideration.

The authors suggest that democracy is necessary for boosting economic institutions-induced public debt reduction in SSA.

The novelty of this study is evident in two ways: first, the authors assessed the relationship between economic institutions and public debt in SSA using novel measures such as government integrity, tax burden and government spending from the Heritage Foundation instead of traditional institution measures from World Governance Indicators used by earlier studies. The authors further contribute to literature by being the first to consider the foundational role of political institutions in employing economic institutions to fight high public debt in SSA. Again, the authors included the threshold at which political institutions can cause economic institutions to have a desired impact on public debt in SSA.