The behavior of external debt in Asian countries: evidence based on panel unit root tests
This article investigates the mean-reverting behavior of the external debt ratio based on a clustered of 19 Asian countries from 1981 to 2010. For this purpose, we use a government's intertemporal budget constraint (GIBC) model popularized by Hamilton and Flavin (1986). Our conclusions were dra...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Vilnius Gediminas Technical University (VGTU) Press Technika
2013
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| Online Access: | http://psasir.upm.edu.my/id/eprint/28317/ http://psasir.upm.edu.my/id/eprint/28317/1/The%20behavior%20of%20external%20debt%20in%20Asian%20countries.pdf |
| _version_ | 1848846084155113472 |
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| author | Lau, Evan Baharumshah, Ahmad Zubaidi Soon, Siew Voon |
| author_facet | Lau, Evan Baharumshah, Ahmad Zubaidi Soon, Siew Voon |
| author_sort | Lau, Evan |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This article investigates the mean-reverting behavior of the external debt ratio based on a clustered of 19 Asian countries from 1981 to 2010. For this purpose, we use a government's intertemporal budget constraint (GIBC) model popularized by Hamilton and Flavin (1986). Our conclusions were drawn from panel data based tests, including the newly developed test that accounts for both cross-sectional dependency and structural breaks. Two major findings are noteworthy; first majority debt ratios in the Asian countries are affected by structural breaks. Second, we find unit root tests that do not accommodate breaks are less likely to detect mean reversion in the debt ratios. In all, our results indicate debt sustainability is a general characteristic of all the Asian countries. |
| first_indexed | 2025-11-15T08:57:05Z |
| format | Article |
| id | upm-28317 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T08:57:05Z |
| publishDate | 2013 |
| publisher | Vilnius Gediminas Technical University (VGTU) Press Technika |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-283172017-07-10T05:53:15Z http://psasir.upm.edu.my/id/eprint/28317/ The behavior of external debt in Asian countries: evidence based on panel unit root tests Lau, Evan Baharumshah, Ahmad Zubaidi Soon, Siew Voon This article investigates the mean-reverting behavior of the external debt ratio based on a clustered of 19 Asian countries from 1981 to 2010. For this purpose, we use a government's intertemporal budget constraint (GIBC) model popularized by Hamilton and Flavin (1986). Our conclusions were drawn from panel data based tests, including the newly developed test that accounts for both cross-sectional dependency and structural breaks. Two major findings are noteworthy; first majority debt ratios in the Asian countries are affected by structural breaks. Second, we find unit root tests that do not accommodate breaks are less likely to detect mean reversion in the debt ratios. In all, our results indicate debt sustainability is a general characteristic of all the Asian countries. Vilnius Gediminas Technical University (VGTU) Press Technika 2013 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/28317/1/The%20behavior%20of%20external%20debt%20in%20Asian%20countries.pdf Lau, Evan and Baharumshah, Ahmad Zubaidi and Soon, Siew Voon (2013) The behavior of external debt in Asian countries: evidence based on panel unit root tests. Journal of Business Economics and Management, 14 (suppl. 1). S377-S394. ISSN 1611-1699; ESSN: 2029-4433 10.3846/16111699.2012.720589 |
| spellingShingle | Lau, Evan Baharumshah, Ahmad Zubaidi Soon, Siew Voon The behavior of external debt in Asian countries: evidence based on panel unit root tests |
| title | The behavior of external debt in Asian countries: evidence based on panel unit root tests |
| title_full | The behavior of external debt in Asian countries: evidence based on panel unit root tests |
| title_fullStr | The behavior of external debt in Asian countries: evidence based on panel unit root tests |
| title_full_unstemmed | The behavior of external debt in Asian countries: evidence based on panel unit root tests |
| title_short | The behavior of external debt in Asian countries: evidence based on panel unit root tests |
| title_sort | behavior of external debt in asian countries: evidence based on panel unit root tests |
| url | http://psasir.upm.edu.my/id/eprint/28317/ http://psasir.upm.edu.my/id/eprint/28317/ http://psasir.upm.edu.my/id/eprint/28317/1/The%20behavior%20of%20external%20debt%20in%20Asian%20countries.pdf |