Exploring the Impact of Inflation and External Debt on Economic Growth in Morocco: An Empirical Investigation with an ARDL Approach

Asian Economic and Financial Review

article

Sara EL ABOUDI¹  Imad KHANCHAOUI¹ 

[1] Organizational Management Sciences Lab National School of Business and Management ,(ENCG) Ibn Tofail University

关键词: Inflation;    External debt;    Economic growth;    ARDL;    Short and long term;    Bounds test.;   

DOI  :  10.18488/journal.aefr.2021.1111.894.907

学科分类：社会科学、人文和艺术（综合）

来源: Asian Economic and Social Society

【 摘 要 】

This article seeks to empirically assess the effect of inflation and external debt on economic growth in Morocco. The estimates cover the period from 1985 to 2019. The results from the ARDL model show that external debt negatively influences the country's growth in the short and long terms. Due to its direct effect, inflation slows down economic activity and leads to lower GDP growth. The econometric estimate indicates that the low level of inflation leads to difficulties in repaying debt and, consequently, reduced economic growth. Low inflation also hurts economic competitiveness among small and medium enterprises (SMEs). Although the inflation rate is lower than the interest rates, it reduces the profit margins of companies and leads to lower investment. The negative effect on economic competitiveness leads to decreased sectoral added value, reducing future economic growth rates. Based on the results, two main measures are proposed to mitigate the negative effect of inflation and debt on economic growth. First, we must develop better institutional and governance quality. The latter allows debt funds to be well spent on non-rent-producing sectors capable of reviving the Moroccan economy. Second, we have to look for good inflation, in other words, inflation that stimulates economic activity without creating economic distortions.

【 授权许可】

CC BY