Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280111 
Year of Publication: 
2023
Citation: 
[Journal:] Journal of Business and Socio-economic Development [ISSN:] 2635-1692 [Volume:] 3 [Issue:] 4 [Publisher:] Emerald [Place:] Bingley [Year:] 2023 [Pages:] 293-307
Publisher: 
Emerald, Bingley
Abstract: 
Purpose This study aims to examine the symmetric and asymmetric impact of external debt on inflation in Sudan from 1970 to 2020 within a multivariate framework by including money supply and the nominal effective exchange rate as additional inflation determinants. Design/methodology/approach The authors utilize an Auto Regressive Distributed Lag (ARDL) model to examine the symmetric impact of external debt on inflation, while the asymmetric impact is examined using a Nonlinear ARDL (NARDL) model. The existence of a long-run relationship between inflation and external debt is tested using the bounds-testing approach to cointegration, and a vector error-correction model is estimated to determine the short parameters of equilibrium dynamics. Findings The linear ARDL model results show that external debt has no statistically significant impact on inflation in the long run. On the contrary, the results of the NARDL model show that positive and negative external debt shocks statistically affect inflation in the long run. The estimated long-run elasticity coefficients of the linear and nonlinear ARDL models reveal that the domestic money supply has a statistically significant positive impact on inflation. In contrast, the nominal effective exchange rate has a statistically significant negative impact on inflation. Practical implications The reliance on symmetric analysis may not be sufficient to uncover the existence of a linkage between external debt and inflation. Proper external debt management is crucial to control inflation rates in Sudan. Originality/value To date, no empirical study has assessed the external debt-inflation nexus and its potential asymmetry in Sudan, and the current study aims to fill this gap in the literature.
Subjects: 
External debt
Exchange rate
Inflation
Money supply
NARDL
Sudan
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article
Document Version: 
Published Version
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