This study examines the sustainability and
relationship of public debt to selected
macroeconomic variables for South Asian Association of Regional
Cooperation (SAARC) countries from 1996 to 2017. For the
relationship of public debt to macroeconomic variables, we employ
a panel Autoregressive Distributed Lagged (ARDL) model. For
sustainability measurement of public debt, we used a theoretically
derived model based on necessary and sufficient conditions. The
panel ARDL results for the long run show that the savinginvestment gap and economic growth negatively while the budget
deficit and current account positively explain public debt. The
sustainability measurement results based on necessary and
sufficient conditions reveal that public debt remains
unsustainable for most of the years in the presence of
macroeconomic variables. It is recommended that countries in this
association should formulate policies that promote saving culture.
This saving culture may not only promote investment but also can
affect the current account situation of these countries.
1-Ayaz khan PhD Scholar, Department of Economics, Abdul Wali Khan University Mardan, KP, Pakistan.2-Zahoor ul Haq Professor, Department of Economics, Pakhtunkhwa Economic Policy Research Institute, Abdul Wali Khan University Mardan, KP, Pakistan.3-Javed Iqbal Assistant Professor, Department of Economics, Pakhtunkhwa Economic Policy Research Institute, Abdul Wali Khan University Mardan, KP, Pakistan.
Public Debt, Macroeconomic Variables, Panel ARDL, Sustainability, SAARC Countries