This work tries to analyze the effect of external public debt on the economy of Bangladesh with the help of crowding out effect. The data set used for this purpose ranged from 1982-2016. For the case of crowding out effect, there are two popular views, the classical view and the Keynesian view. The finding of this work shows existence of the crowding out effect for the case of external public debt for Bangladesh. This is a time series work. Firstly the unit root property of the variables are checked followed by determining appropriate lag and Johansen cointegration test. Based on cointegration test results, VECM has been used.
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