The asymmetric and threshold impact of external debt on economic growth: new evidence from Egypt

Purpose Within a multivariate framework, this study examines the asymmetric and threshold impact of external debt on economic growth in Egypt during period 1980–2019. Design/methodology/approach The paper uses nonlinear autoregressive distributed lag (NARDL) bounds testing approach to cointegration vector error-correction model estimate short- long-run parameters equilibrium dynamics. A multiple structural breaks is estimated test nonlinearity relationship between growth. Findings Results NARDL show robust statistically significant negative stemming from both positive external-debt-induced shocks. In terms magnitude, one hand, shocks exceeds that positive. short long run, other symmetric. There also support for hypothesis which obtains once level debt-to-GDP ratio equals or 96.7%. Practical implications Identifying after becomes harmful would help inform policymakers about maximum levels can be sustained without impairing Originality/value current makes substantial contribution extant literature debt-growth tradeoffs. It ground by being first tract examines, using model, asymmetry tradeoffs Egypt.