AN EMPIRICAL RESEARCH OF THE RELATIONSHIP BETWEEN PUBLIC DEBT AND ECONOMIC GROWTH IN VIETNAM

Authors

  • Le Thi Thanh Ha Asia University
  • Andi Azhar Asia University
  • Wing Keung Wong Asia University

Abstract

The paper uses the Vector Auto Regression (VAR) model and Granger Causality Analysis to analyze the two-way relationship between public debt and economic growth in Vietnam between 1992 and 2016. Pulse response functions, variance decomposition, ADF unit tests, residual autocorrelation assays and co-alignment tests were performed to examine the transmission mechanism of shocks, fluctuations of variables and the suitability of the model. The results show that there is a one-way causal relationship between public debt and economic growth in Vietnam. This is the basis for the writer to propose policy suggestions on public debt and economic development in Vietnam.

Key Words: Public Debt, Economic Growth, VAR Model, Granger Causality Analysis

Author Biographies

Le Thi Thanh Ha, Asia University

Department of Business Administration, College of Management, Asia University, Taiwan

Andi Azhar, Asia University

Department of Business Administration, College of Management, Asia University, Taiwan

Wing Keung Wong, Asia University

Department of Business Administration, College of Management, Asia University, Taiwan

References

Akaike, H. (1973). Information theory and an extension of the maximum likelihood principle. Proc. 2nd Inter, Symposium on Information Theory, p.267-281, Budapest.

Barro, R.J. (1974). Are Government Bonds Net Wealth?. Journal of Political Economy. 82 (6), p.1095-1117.

Bui, D. D. (2012). Public Expenditure and Sustainable Development. Special Economic and Business Bulletin - VNU Journal of Science, Vol. 28, No. 4/2012, p.217.

Dickey, D.A. and Fuller, W.A. (1981). Distribution of the estimators for autoregressive time series with a unit root. Econometrica 49, p.1057-72.

Egbetunde, T. (2012). Public Debt and Economic Growth in Nigeria: Evidence from Granger Causality. American Journal of Economics 2012, 2 (6), p.101-106.

Elmendorf, D.W., and G.N. Mankiw. (1999). Government debt In Handbook of Macroeconomics, Ed. By J.B. Taylor, and M. Woodford, vol.1 of Handbook of Macroeconomics, chap.25, p.1615-1669. Elsevier.

Johansen, S. and Juselius, K. (1990). Maximum Likelihood Estimation and Inference on Cointegration. Oxford Bulletin of Economics and Statistics, 52, p.169-210.

Keynes, J. M. (1936). The General Theory of Employment, Interest, and Money. Harcourt, Brace and World, CW. VII, p.128.

Krugman. (1988). Financing vs. forgiving a debt overhang. Journal of Development Economics, 1988, vol. 29, issue 3, p.253-268.

MacKinnon, J. G. (1996). Numerical distribution functions for unit root and cointegration tests. Journal of Applied Econometrics, 11, p. 601-618.

Nguyen, H.T. (2012). Foreign Debt Relations and Vietnam's Economic Growth. Journal of Development and Integration, No. 4 (14), May-June 2012, p.21-25.

Ozcicek, O. and McMillin, D.W. (1999). Lag Length Selection in Vector Autoregressive Models: Symmetric and Asymmetric Lags. Applied Economics, 31, p.517-524.

Ricardo, D. (1970). Funding System. An Fifth and Sixth Edition of the Encyclopedia Britannica, 1820, in The Works and Correspondence of David Ricardo, Vol. 4, Pamphlets and Paper 1815-1823, p.143-200.

Su, D. T. (2012). Public Debt Relief - Empirical Research in Vietnam. Journal of Economic Development, No. 257, March 2012, p.20-26.

Downloads

Published

2020-12-22

Issue

Vol. 1 No. 1 (2018): PROCEEDINGS INTERNATIONAL SEMINAR ON ACCOUNTING SOCIETY

Section

Articles