Author: Allakuliev, Akmal; Sattoriy, Fayzullokh

Annotation: This study investigates the relationship between external debt and economic growth in the Uzbekistan during the period 2010–2020. Two-step Engle and Granger Cointegration method is employed to determine the cointegration relationship between external debt and GDP growth. Our findings show that there is a negative significant relationship between external debt and economic growth. We can also observe that a 1% increase in external debt will lead to a 24% decrease in GDP growth. Also the results of ECM model suggests that if economic shocks and periodic downturn occur in GDP as a result of external debt, then 86.0% of disequilibrium will return to its equilibrium in each subsequent short period. This suggests that GDP growth may return to its equilibrium after a period of 1.17 (1/86) from debt crisis and shocks.

Keywords: economic growth, cointegration, debt overhang, external public debt, error correction model.

Pages in journal: 295 - 305