Does External Debt Stocks Have an Asymmetric Effect on Inflation Dynamics in Cameroon? An Application of Nonlinear ARDL
Journal Title: American Journal of Economics and Business Innovation (AJEBI) - Year 2023, Vol 2, Issue 2
Abstract
External debt is indispensable, especially in developing countries which usually face budget deficits to cover up their saving-investment gap. However, the effect of external debt on inflation depends on whether it is increasing or decreasing. Hence, this study aims to examine the effect of external debt stocks on inflation using World Bank data from 1980 to 2020 in Cameroon. The study makes use of non-linear ARDL to examine the positive and negative changes in external debt stocks and their effects on inflation. The results indicate a long-run increasing and decreasing asymmetry effect of external debts on inflation. Only the coefficient of positive external debt stock on inflation is positive and significant in the long run while in the short run, positive and negative external debt stocks respectively have a negative and positive significant impact on inflation. The study recommends that the government should be mindful of increasing external debt as it will become inflationary in the long run.
Authors and Affiliations
Enongene Betrand Ewane Etape Felix Mejame
Keywords
Related Articles
- EP ID EP721185
- DOI https://doi.org/10.54536/ajebi.v2i2.1396
- Views 52
- Downloads 0
Does Purchasing Power Parity Hold Between Asian Economies Before and After the Financial Crisis? Evidence from the Time-Series Model
In exchange rate determination models, the purchasing power parity (PPP) acts as a fundamental theory, which provides the basis for exchange rate determination across countries respectively. The main objective of this st...
The Scientology of Hypothesis Testing in Empirical Research: Emphasizing Economic Significance
Over the decades, scientists across various disciplines have cautioned against the practice of over-emphasizing statistical significance at the expense of economic or practical significance. It seems that empirical resea...
Assessment of Internal Audit Tools: A Study of Some Government Health Institutions in Ghana
The growing number of allegations on financial statement fraud, lack of accountability, misappropriation and mismanagement of public resources in public institution has created an increase attention for the need of inter...
Institutional Quality, Corruption, and Income Inequality - A Panel Study of Selected SAARC Economies
Previous studies have primarily focused on issues related to income inequality, aiming to identify the underlying causes and urging swift action to mitigate such disparities. In this context, the current article expands...
Click, Share, Buy: The Transition of General Commerce into Social Commerce in Bangladesh: The Impact of Consumer’s Psychological Perceptions on IEWOM and Consumer Intention to Purchase
As social media platforms continue to rise in popularity, they are quickly becoming an integral part of the retail industry, giving birth to the concept of social commerce. Bangladesh has seen a similar transition, with...