Debt and Growth in West African Economic and Monetary Union Countries (WAEMU): The Role of Institutional Quality

Croi, Kacou Firmin; Diaw, Adama

doi:10.4236/me.2020.119107

Cited by 4 publications

(4 citation statements)

References 43 publications

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“…Two, the effectiveness or otherwise of public debt in promoting growth in Nigeria depends on the debt-to-GDP ratio and institutional factors. This accords with the results obtained by Chudik et al (2017), Croi and Diaw (2020), Daud and Podivinsky (2014), De Pascale and Scrocco (2022), Gómez-Puig and Sosvilla-Rivero (2022), Hassan and Meyer (2021), Kim, Ha, and Kim (2017), Kourtellos et al (2013), Sani, Said, Ismail, and Mazlan (2019), Yolcu-Karadam (2018, as well as Tarek and Ahmed (2017). The study also finds that the model involving corruption as the threshold variable provides a better fit than using the debt-to-GDP ratio.…”

Section: Resultssupporting

confidence: 90%

“…Yolcu-Karadam ( 2018) finds a threshold level of 106.6% for debt using data on 136 developed and developing countries, including Nigeria. Croi and Diaw (2020) find a debt threshold of 54.5%, beyond which the net growth effect of debt is positive and significant when institutional quality is considered. Finally, Hassan and Meyer (2021) find a threshold level of 5.1 for institutional quality (on a scale of 0 to 10) above which external debt contributes to the growth process.…”

Section: Introductionmentioning

confidence: 88%

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Revisiting the threshold effect of corruption in the link between public debt and economic growth in Nigeria

Ogbaro

Young

Bank-Ola

2022

Econ. J. Emerg. Mark.

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Purpose ― This study contributes to the empirical literature on the nonlinear relationship between public debt and economic growth in Nigeria using threshold regression methodology. It provides insight into how Nigeria can grow out of debt sustainably in the face of the prevailing level of corruption as an institutional indicator. Method ― Stata's threshold command is used for data analysis, and this command fits time-series threshold models in finding the optimal number of thresholds. It does this by minimising an information criterion and using conditional least squares to estimate the parameters of the threshold regression model. Findings ― The results show that the relationship between public debt and economic growth is nonlinear. The threshold effect of public debt on growth depends on the debt-to-GDP ratio and the level of corruption. Substantial evidence supports two threshold levels of debt-to-GDP ratio and corruption in the debt-growth nexus. The two threshold levels of corruption are 63.21 and 64.27 (on a scale of 0 to 100), with the growth effect of public debt being positive and significant in the second regime only. Implication ― Public debt exerts significant positive effects on growth as long as corruption is kept at a moderate level. Thus, the government of Nigeria needs to ensure that corruption is pegged at a fairly moderate level that will guarantee the positive contribution of accumulated debt to economic growth. Originality ― Unlike previous works, the study addresses the problem caused by the mechanical effect of a change in the real GDP growth rate on debt. It is based on the assumption of a maximum of two thresholds.

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Section: Resultssupporting

confidence: 90%

Section: Introductionmentioning

confidence: 88%

Revisiting the threshold effect of corruption in the link between public debt and economic growth in Nigeria

Ogbaro

Young

Bank-Ola

2022

Econ. J. Emerg. Mark.

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“…Following Ibhagui and Olokoyo (2018), Wang et al (2020), Croi and Diaw (2020), Zhou et al (2021) and Akram and Rath (2021), the PTR model of Hansen (1999) is used, and it is assumed that there is an asymmetric non-linear nexus between corruption and FDI. Firstly, if a threshold effect is present, it is tested to see whether a double threshold effect or a single threshold effect exists.…”

Section: Model Specificationmentioning

confidence: 99%

The corruption-foreign direct investment nexus in sub-Saharan Africa. Fresh evidence from a panel threshold regression approach

Amoh

Abdul-Mumuni

Nsor-Ambala

et al. 2023

JFC

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Purpose Most emerging economies have made conscious efforts through policy initiatives to attract foreign direct investment (FDI). However, a significant obstacle to FDI inflow has been the prevalence of corruption in the host country. This study, therefore, aims to examine whether there is an optimum corruption value that results in threshold effects of corruption on FDI. Design/methodology/approach To achieve this objective, this study used Hansen’s (1999) panel threshold regression (PTR) model by using a panel data of 30 sub-Saharan African (SSA) countries from 2000 to 2021. Findings This study finds that the nexus between corruption and FDI has a single threshold effect, with a 5.37% optimum corruption threshold value. At this threshold value, corruption affects FDI negatively. Any corruption value that is below the threshold value also elicits a negative corruption–FDI relationship. Despite having a negative relationship when the corruption value is above the optimum corruption threshold, it is not statistically significant. Research limitations/implications The implication of the results is that it is deleterious to use corrupt practices to draw FDI to SSA nations. Originality/value To the best of the authors’ knowledge, this study is one of the first in the corruption–FDI nexus literature to use Hansen’s PTR model to estimate an optimal corruption threshold. The authors recommend that policymakers in the selected SSA countries reconsider the use of corruption to attract FDI because there is an optimal corruption threshold that could impact FDI in the host country.

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“…2021), Fuentes (2013), andAlfaro, Charlton, andKanczuk (2008). 12 See De Pascale and Scrocco (2022), Croi and Diaw (2020), Eberhardt and Presbitero (2015), and Kourtellos, Stengos, and Tan (2013). 13 The estimate for each group of countries incorporating IQ is statistically complicated as the variance of this variable is much lower within each group.…”

Section: Estimating a Threshold Across Countriesmentioning

confidence: 99%

Dealing with Debt: Less Risk for More Growth in Latin America and the Caribbean

Powell,

Valencia

2023

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Debt has risen around the world, and Latin America and the Caribbean is no exception. Total debt has grown to US$5.8 trillion, or 117 percent of GDP, for the region and as much as 140 percent of GDP for its five largest economies. Public debt soared to over 70 percent of GDP during the pandemic, and corporates issued substantial amounts to survive the crisis. While the spending that led to this debt helped the region weather the pandemic, it is now weighing down the economy. This book examines the rise in debt in Latin America and the Caribbean and offers recommendations to policymakers to ensure debt is used wisely, avoid the harmful impacts, manage high debt levels well, and bring down debt where it is too high. It is hoped that the analyses and policy suggestions in this volume contribute to successfully confronting the challenges, lowering risk, boosting growth, and improving living standards across the region and beyond.

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Debt and Growth in West African Economic and Monetary Union Countries (WAEMU): The Role of Institutional Quality

Cited by 4 publications

References 43 publications

Revisiting the threshold effect of corruption in the link between public debt and economic growth in Nigeria

Revisiting the threshold effect of corruption in the link between public debt and economic growth in Nigeria

The corruption-foreign direct investment nexus in sub-Saharan Africa. Fresh evidence from a panel threshold regression approach

Dealing with Debt: Less Risk for More Growth in Latin America and the Caribbean

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