Debt relief initiatives 20 years on and implications of the new development finance landscape

Mustapha, Shakira; Prizzon, Annalisa

doi:10.4324/9780429055614-7

Cited by 2 publications

(3 citation statements)

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“…The bias towards domestic and external debt in West Africa could be a part of injudicious fiscal choices in stimulating investment-generation measures in the region, as findings indicate that the huge indebtedness might largely undermine the growth rate of investment across countries. This empirical postulation corroborates the argument of some authors (Bonga et al , 2015; Omojolaibi et al , 2016; Mustapha and Prizzon, 2018). These authors commonly stress that spiraling public debt could not significantly influence investment-generation capacity of an economy that does not accord high priority to investment.…”

Section: Methodssupporting

confidence: 91%

“…In sum, findings robustly buttress the view that public debt has an insignificant influence on domestic investment in West Africa, underscoring that policies and institutional system that lead to public debt spiral could not provide tailoring support for enhanced investment levels through borrowed funds in the long run. Compared to the quality of public debt management institutions in other African countries, on the basis of inefficient allocation and the risk of debt distress, estimated results find some similar strengths and weaknesses (Mustapha and Prizzon, 2018). The pervasive deficiencies in public sector could be ascribed to ineffective channeling of both internal and external debt to productive uses in the long run.…”

Section: Methodsmentioning

confidence: 93%

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Public debt-investment nexus: the significance of investment-generation policy in West Africa

Fagbemi

Adeosun

2020

JEAS

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PurposeThe main goal of the study is to explore the long run relationship between public debt and domestic investment in West Africa. Essentially, a study of this nature is to proffer major inroads into addressing low investment levels plaguing the region and securing critical fiscal policy measures.Design/methodology/approachThe study examines the long-run relationship between public debt and domestic investment in 13 West African countries between 1986 and 2018 with the use of Panel Dynamic Least Squares (DOLS) and Panel Fully Modified Least Squares (FMOLS), and causality test based on Toda and Yamamoto.FindingsPublic debt (% of GDP) and external debt stocks have an insignificant effect on domestic investment in the long run, suggesting the negligible effect of public debt on the level of investments in the region. Further evidence shows that domestic investment Granger causes public debt indicators, implying that there is unidirectional causality. This suggests that any investment-generation policy could engender a rise in public borrowing, although such public loans might not be effective when there is pervasive mismanagement of public funds, as public debts need to be well managed for ensuring improved investment.Research limitations/implicationsThe study suggests that maintaining a strong and effective debt-investment nexus requires fiscal consolidation efforts across countries, as such could lead to enhanced institutional capacity and sustainable investment-generation policy.Originality/valueSince panel regression techniques used by the previous studies (Fixed and Random effects) could be susceptible to possible statistical errors due to endogeneity issue and might not be well suited for explaining long-run effect or capturing the part of investment sustainability, their conclusions could be misleading and remain untenable in West Africa' s context. Hence, the study adopts techniques (DOLS and FMOLS) which could account for endogeneity issue and provide better elucidations for long-term effects.

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Section: Methodssupporting

confidence: 91%

Section: Methodsmentioning

confidence: 93%

Public debt-investment nexus: the significance of investment-generation policy in West Africa

Fagbemi

Adeosun

2020

JEAS

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“…The study delves into the significance of maintaining primary surpluses, where government income exceeds expenditures (excluding interest payments), as a prerequisite for intertemporal solvency. Manageable debt levels are posited when primary surpluses are sustained at sustainable levels, aligning with research by Mustapha and Prizzon (2015). The research introduces the concept of "model-based sustainability" (MBS), evaluating a government's principal balance through a comparative analysis of primary surplus-to-income and debt-to-income ratios.…”

Section: Literature Reviewmentioning

confidence: 99%

Macroeconomics Determinants of Fiscal Sustainability in the Asian Countries

Zahid,

Jadoon,

Hamza

et al. 2024

BBE

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The present study is designed to investigate how macroeconomic determinants of the South Asian region have affected the fiscal sustainability from 1980 to 2021. This study has used Newey and West (1987) robust standard errors approach to overcome the problem of autocorrelation and heteroscedasticity in panel data. The results of the statistical model confirmed the existence of fiscal sustainability in selective Asian countries. The significant contribution of the study is to obtain robust standard errors that rectify the issues of violation of simple regression analysis, which is the solution to all problems relevant to OLS regression. Furthermore, the results also confirmed that using macroeconomic determinants significantly improves fiscal sustainability. The results confirmed that macroeconomic factors contribute to fiscal sustainability. The study concluded that South Asian countries should use macro indicators as sources to achieve a higher fiscal sustainability rate.

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Debt relief initiatives 20 years on and implications of the new development finance landscape

Cited by 2 publications

References 0 publications

Public debt-investment nexus: the significance of investment-generation policy in West Africa

Public debt-investment nexus: the significance of investment-generation policy in West Africa

Macroeconomics Determinants of Fiscal Sustainability in the Asian Countries

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