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The Impact of Public External Debt and Debt Servicing on Economic Growth in Morocco: Ardl Economic Model
The relationship between public debt and economic growth in many countries has been a topic of debate for a long time. Despite extensive research, the connection between debt and growth is still controversial, especially in developing nations where growing public debt has been a persistent issue. This article aims to conduct an empirical analysis of the impact of public external debt on growth.We utilized a deductive methodology based on a detailed literature review that included both theoretical and empirical information. Subsequently, we conducted an economic study that employed the ARDL model to investigate the impact of public debt (domestic and foreign debt) on Morocco's economic growth. We collected annual data from 1975 to 2022 to carry out an experimental analysis. This empirical study utilized the ARDL model to analyze the effects of external debt stocks, total debt service, population growth, and trade openness on economic growth. The model also examined the specific channels through which public debt influences the economy.The study's findings indicate a long-term negative relationship between external debt and economic growth, with larger external debt resulting in slower growth rates. The investigation also examined the impact of total service debt on economic growth. The report highlights the detrimental impact of debt overhang on long-term growth, with service debt adding to the issue.Population expansion has a favorable effect on economic growth, and trade openness also has a positive long-term correlation with GDP growth. There is a strong correlation between debt overhang and service debt, which means increasing one's pay in exchange for another's. The paper's findings are relevant to policymakers as they have significant consequences for debt management strategies.