The Impact of Interest Rate, Exchange Rate, Inflation and Balance Of Trade on Public Debt: Evidence from Pakistan
| Main Authors: | Ghulam Asghar Phulpoto, Dr. Irfan Ali Mirani, Mohammad Asif channa |
|---|---|
| Format: | Article |
| Bahasa: | eng |
| Terbitan: |
, 2016
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| Subjects: | |
| Online Access: |
https://zenodo.org/record/3534651 |
Daftar Isi:
- With the gradual rise in public expenditures and minimum capital generation in various developing states, different governments have reinstated towards domestic and foreign debt. For making the payment of interest and principal may increase the demand for international currency which can affect the exchange rate and inflation trend of the country. However, this research investigates the impact of interest rate, exchange rate, the balance of trade and inflation on governmental debt in Pakistan. The results confirm that interest rate, balance of trade and exchange rate have significant positive effect on the public debt. The sign of coefficient for inflations shows the negative impact of inflation on public debt however, the results are statistically insignificant. Hence it is recommended that government should pursue those projects which yield positive return so that the outstanding interest on debt and part of principal may easily be paid in time in order to avoid chances of financial distress