Impact of Exchange Rate, and Foreign Direct Investment on External Debt: Evidence from Pakistan Using ARDL Cointegration Approach

Authors

  • Andleeb Zahra Superior University, Lahore, Pakistan
  • Nadia Nasir Superior University, Lahore, Pakistan
  • Saif Ur Rahman Superior University, Lahore, Pakistan
  • Sadia Idress Superior University, Lahore, Pakistan

DOI:

https://doi.org/10.52131/joe.2023.0501.0110

Keywords:

Fiscal deficit, Economic growth, External debt, Pakistan

Abstract

Using time series data from Pakistan 1973 to 2021, this research examines the effect of exchange-rate, fiscal deficits, foreign direct investment and economic expansion on foreign debt. The auto regressive distributed lag model is used in the research to look into the co-integration analysis of variables and their existence. The study confirms the positive and significant relationship exist among the rate of exchange, foreign direct investment, the fiscal deficit, economic growth, and external debt in the long run. However, in the short run, the real effective exchange rate and fiscal deficit are negatively related to the external debt, whereas the economic growth is positively related to the external debt. The policy maker recommended that rises the exchange rate, the value of a domestic currency falls to some extent, which improves the foreign exchange in which loans must be returned.

Author Biographies

Andleeb Zahra, Superior University, Lahore, Pakistan

M.Phil. Scholar, Faculty of Business Administrative

Nadia Nasir, Superior University, Lahore, Pakistan

Professor, Faculty of Business Administration

Saif Ur Rahman, Superior University, Lahore, Pakistan

Assistant Professor

Sadia Idress, Superior University, Lahore, Pakistan

Assistant Professor

Downloads

Published

2023-03-19

How to Cite

Zahra, A., Nasir, N., Rahman, S. U., & Idress, S. (2023). Impact of Exchange Rate, and Foreign Direct Investment on External Debt: Evidence from Pakistan Using ARDL Cointegration Approach. IRASD Journal of Economics, 5(1), 52–62. https://doi.org/10.52131/joe.2023.0501.0110

Issue

Section

Articles

Most read articles by the same author(s)