The Effect of Sovereign Debt on Economic Growth: The Case of Oil-Rich Countries
Key studies have identified the need to study the role of sovereign debt on economic growth, particularly in relation to countries with heavily oil-based status economies. This paper applies a panel vector autoregressive approach to examine the impact of sovereign debt on economic prosperity in several oil-rich countries between 2002 and 2017. The results show that in oil countries, like other developing countries, government debt has not had a positive impact on enhancing economic growth, resulting in a reluctance of such countries to invest debts in production, and a desire for the type of diversification of sources of income observable in most advanced countries.
Keywords: Co-integration, Sovereign Debt, Oil-rich Countries
JEL Classifications: A10, B22, B23, E23, E52, E62