External debt in macroeconomics: A review

Kelvin Lee, Dodo J. Thampapillai*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


The paper provides a concise review of the treatment of external debt in macroeconomic analyses. In this regard, the paper considers: the development of indicators to quantify external debt alongside theoretical and empirical developments in which the indicators are utilised. Following the inherent limitations, the theoretical and empirical studies tend to employ more than one indicator. Both theoretical and empirical frameworks are distinguished in terms of whether they are static or dynamic in nature. The theoretical studies were also distinguished in terms of the utilisation of discrete and continuous frameworks. The empirical models were distinguished with reference to linearity and nonlinearity of the underlying premises. The review enables the reader to appreciate the relative advantages and disadvantages of the various frameworks and their contextual relevance. A key theme that runs through the studies reviewed is the impact of external debt on economic performance. The results, which are context specific, are mixed.

Original languageEnglish
Pages (from-to)103-118
Number of pages16
JournalInternational Journal of Economics and Business Research
Issue number2
Publication statusPublished - 2016
Externally publishedYes


  • Debt service
  • Debt-to-GDP ratio
  • Difference and differential equations
  • External debt
  • Static and dynamic models


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