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Effect of External Debt Sustainability on Economic Growth of Sudan: Using Cointegration and Error Correction Mechanism

This paper is an attempt to develop an Error Correction Model (ECM) that, evaluates the effect of external debt sustainability on the economic growth of Sudan. Its Primary purpose, to compare the long run relationship between external debt sustainability and economic growth, estimated through Cointegration and ECM. The empirical results showed that, trade openness, inflation, capital formation, and measures of external debt sustainability, have a significant impact on the economic growth of Sudan. This result is confirmed by the estimates of both, Johansen Cointegration and Engle Granger error correction method. However, the later showed, effect of the changes in the explanatory variables, is above the equilibrium. The equilibrium level is achieved extremely slowly, as the speed of adjustment in economic growth is found to be very small.