Explaining Africa’s Debt: The Journey So Far and the Arithmetic of the Policymaker

Atta-Mensah, Joseph; Ibrahim, Muazu

doi:10.4236/tel.2020.102027

Cited by 6 publications

(8 citation statements)

References 18 publications

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“…Since the onset of the debt crises in the early 1970s and 1980s, which affected most developing and transition economies, there has been an upsurge in the empirical analysis of the determinants of public debt (International Monetary Fund (IMF), 2019; World Bank Group, 2019; Economic Commission for Africa (ECA), 2019; Easterly, 2002). Indeed, the economic literature has identified several factors both external and internal that can influence public debt (Atta-Mensah & Ibrahim, 2020;Bayale et al, 2020;Calderón & Zeufack, 2020;Chiminya & Nicolaidou, 2015;Fatás et al, 2019;Forslund et al, 2011;Sadik-Zada & Gatto, 2019). Externally, adverse global developments such as global financial crises, oil price shocks, high-interest rates, recessions in industrial and developed countries and weak commodity prices are identified to be the main drivers of public debt accumulation (African Development Bank, 2018;Atta-Mensah & Ibrahim, 2020;Chiminya & Nicolaidou, 2015;Easterly, 2002;Fatás et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

“…Indeed, the economic literature has identified several factors both external and internal that can influence public debt (Atta-Mensah & Ibrahim, 2020;Bayale et al, 2020;Calderón & Zeufack, 2020;Chiminya & Nicolaidou, 2015;Fatás et al, 2019;Forslund et al, 2011;Sadik-Zada & Gatto, 2019). Externally, adverse global developments such as global financial crises, oil price shocks, high-interest rates, recessions in industrial and developed countries and weak commodity prices are identified to be the main drivers of public debt accumulation (African Development Bank, 2018;Atta-Mensah & Ibrahim, 2020;Chiminya & Nicolaidou, 2015;Easterly, 2002;Fatás et al, 2019). For instance, the shocks of the global financial crisis and the 2014 terms-of-trade shock have contributed to swelling-up the debt of many African countries.…”

Section: Introductionmentioning

confidence: 99%

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On the robust drivers of public debt in Africa: Fresh evidence from Bayesian model averaging approach

Nagou

Bayale

Kouassi

2021

Cogent Economics & Finance

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While economic theory suggests a wide range of potential drivers of public debt, there is little consensus regarding the most relevant ones. This paper analyzes the determinants of the public debt in Africa. This is done by adopting a Bayesian Model Averaging (BMA) approach applied to data of 51 African countries, spanning the period 1990-2018. Our results suggest that, among the set of twentyseven (27) regressors considered, those reflecting international financial and institutional conditions as well as internal economic prospects tend to receive high posterior inclusion probabilities. Then, the study explores the effect of these regressors on public debt by employing the fixed effects (FE) and the system Generalized Method of Moments (GMM) estimators. The results reveal that, foreign aid, fiscal deficit, trade openness, military expenditure, interest and exchange rates, debt-service, domestic credit, government stability index, political regime type and socioeconomic crises are the main and robust drivers of public debt accumulation in African countries. These findings are robust to changes in the model specification, the inclusion of socioeconomic crises and regional heterogeneities.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

On the robust drivers of public debt in Africa: Fresh evidence from Bayesian model averaging approach

Nagou

Bayale

Kouassi

2021

Cogent Economics & Finance

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“…For some of these scholars, debt is bad in itself (Ampah and Kiss 2019; Atta-Mensah and Ibrahim 2020), while for others debt is problematic only in combination with other conditions (Edo, Osadolor and Dading 2020). Some see the solution to the debt problem in more rapid economic expansion and improved primary balances (Attah-Mensah and Ibrahim 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

“DELIVER AFRICA FROM DEBTS”: Good Governance Alone is not Enough to Save the Continent From Debt Onslaught

2021

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The present article analyzes the debt–economic growth nexus in African countries while controlling for the impact of good governance indicators. In contrast to a long tradition of scholarship that has consistently suggested that government debt has a detrimental impact on economic growth in sub-Saharan Africa, recent studies have actually shown that government debt, when coupled with improvements in the quality of government, is actually a driver of economic growth. By analyzing an original dataset that covers the 2002–15 period and additional debt–economic growth data going up to the year 2020, we are able to suggest three conclusions. First, in the absence of debt, good governance matters in improving economic growth. Second, some dimensions of governance are better predictors of economic performance than others—as the “good enough governance” literature has in recent years suggested. Third, under no circumstances is debt government growth beneficial for the economic performance of African countries. Building on this evidence, we suggest that the COVID-19 pandemic—which has already slowed down African economies and increased their debt exposure—may prevent African countries from making greater progress along the developmental path.

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“…Since the onset of the debt crises in the early 1970s and 1980s which affected most developing and transition economies, there has been an upsurge in the empirical analysis of the determinants of public debt (IMF, 2019;World Bank, 2019;ECA, 2019;Easterly, 2002). The economic literature has identified several factors both external and internal that can influence public debt (Calderón and Zeufack, 2020;Bayale et al, 2020;Atta-Mensah and Ibrahim, 2020;Fatás et al, 2019;Sadik-Zada and Gatto, 2019;Chiminya and Nicolaidou, 2015;Forslund et al, 2011). Externally, adverse global developments such as such as global financial crises, oil price shocks, high interest rates, recessions in industrial and developed countries and weak commodity prices (specifically raw materials) are identified to be the main drivers of public debt accumulation (Atta-Mensah and Ibrahim, 2020;Fatás et al, 2019;AfDB, 2018;Chiminya andNicolaidou, 2015, Easterly, 2002).…”

Section: Introductionmentioning

confidence: 99%

“…The economic literature has identified several factors both external and internal that can influence public debt (Calderón and Zeufack, 2020;Bayale et al, 2020;Atta-Mensah and Ibrahim, 2020;Fatás et al, 2019;Sadik-Zada and Gatto, 2019;Chiminya and Nicolaidou, 2015;Forslund et al, 2011). Externally, adverse global developments such as such as global financial crises, oil price shocks, high interest rates, recessions in industrial and developed countries and weak commodity prices (specifically raw materials) are identified to be the main drivers of public debt accumulation (Atta-Mensah and Ibrahim, 2020;Fatás et al, 2019;AfDB, 2018;Chiminya andNicolaidou, 2015, Easterly, 2002). On the domestic front, macroeconomic policies have been blamed such as fiscal irresponsibility, exchange rate misalignment, policies that deter saving (negative real interest rates for instance) and the institutional framework (Calderón and Zeufack, 2020;IMF, 2019;World Bank, 2019;ECA, 2019;AfDB, 2018;Forslund et al, 2011).…”

Section: Introductionmentioning

confidence: 99%

Empirical Investigation into the Determinants of Public Debts in Africa: New Insights Using a Panel Bayesian Model Averaging Approach

Bayale¹

2020

Preprint

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The determinants of public indebtedness in developing countries is still generating a lot of interest among academics and policy makers. This paper introduces model uncertainty into the empirical study on the determinants of public debt at continental level. This is done by adopting a Bayesian model averaging approach applied to data of 51 African countries spanning from 1990 to 2018. Our results suggest that, among the set of twenty-seven (27) regressors considered in the baseline model, those reflecting international financial and institutional conditions as well as internal economic prospects tend to receive high posterior inclusion probabilities. These findings are robust to changes in the model specification, the inclusion of economic crises and geographical heterogeneities of the continent.

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Explaining Africa’s Debt: The Journey So Far and the Arithmetic of the Policymaker

Cited by 6 publications

References 18 publications

On the robust drivers of public debt in Africa: Fresh evidence from Bayesian model averaging approach

On the robust drivers of public debt in Africa: Fresh evidence from Bayesian model averaging approach

“DELIVER AFRICA FROM DEBTS”: Good Governance Alone is not Enough to Save the Continent From Debt Onslaught

Empirical Investigation into the Determinants of Public Debts in Africa: New Insights Using a Panel Bayesian Model Averaging Approach

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