Government debt, government debt service and economic growth nexus in Zambia: a multivariate analysis

Saungweme, Talknice; Odhiambo, Nicholas M.

doi:10.1080/23322039.2019.1622998

Cited by 39 publications

(43 citation statements)

References 33 publications

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“…To begin with, research support the hypothesis that the level of public indebtedness is determined by the pace of economic growth (Saungweme and Odhiambo, 2019). This assertion is underscored by the work of Donayre and Taivan (2017) which established that the causal relationship between public debt and real GDP growth is intrinsic to each country.…”

Section: Literature Reviewmentioning

confidence: 93%

“…This hypothesis suggests that economic growth increase as the public debt level rises. Studies that support this view include Barro, (1979Barro, ( , 1990, Krugman (1988), Eberhardt and Presbitero (2015), Ewaida (2017), Huang et al (2018) and Saungweme and Odhiambo (2019).…”

Section: Literature Reviewmentioning

confidence: 97%

“…To begin with, the classical school of thought argues that public debt obstructs economic growth because it reduces both the financial discipline of the budget process and the private sector's access to credit (Broner et al, 2014). They further assert that public debt repayments, typically external debt, crowd out economic growth by discouraging private investment and dissuading potential foreign investors (Modigliani, 1961;Diamond, 1965;Krugman, 1988;Saungweme and Odhiambo, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

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Public debt and economic growth: contemporary evidence from a developing economy

Hilton

2021

AJEB

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Purpose Considering the continuous rise in the public debt stock of developing countries (particularly Ghana) with the unstable economic growth rate for the past decades and the recent borrowing because of the impact of COVID 19, this paper aims to examine the causal relationships between public debt and economic growth over time. Design/methodology/approach The paper uses a dynamic multivariate autoregressive-distributed lag (ARDL)-based Granger-causality model to test the causal relationships between public debt and economic growth [gross domestic product (GDP)]. Annual time-series data that spanned 1978–2018 were sourced from the World Bank Development Indicator database and the IMF fiscal Affairs Department Database and WEO. Findings The results reveal that public debt has no causal relationship with GDP in the short-run but there is unidirectional Granger causality running from public debt to GDP in the long run. Again, investment spending has a negative bi-directional causal relationship with GDP in the short-run but they have a positive bi-directional causal relationship in the long run. Conversely, no short-run causal relationship exists between government consumption expenditure and GDP but long-run Granger causality runs from government consumption expenditure to GDP. Finally, public debt has a positive impact on the inflation rate in the short run. Practical implications The findings imply that government(s) must ensure high fiscal discipline to serve as a precursor for the effective and efficient use of recent borrowing, that is, the loans should be used for highly prioritized projects (preferably investment spending) that are well evaluated and self-sustained to add positively to the GDP. Originality/value This paper provides contemporary findings to augment extant literature on public debt and economic growth by using variables and empirical models, which prior studies could not sufficiently cover in a developing country perspective and affirms that public debt contributes to GDP only in the long run.

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Section: Literature Reviewmentioning

confidence: 93%

Section: Literature Reviewmentioning

confidence: 97%

Section: Literature Reviewmentioning

confidence: 99%

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Public debt and economic growth: contemporary evidence from a developing economy

Hilton

2021

AJEB

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“…In this paper, public debt is the summation of both the domestic and foreign loans of the government. Saungweme and Odhiambo (2019) explored the causal link between public debt and economic growth and public debt service and economic growth in Zambia for a period of 1970 to 2017. The results failed to discover any causal link between public debt and economic growth.…”

Section: Total Debtmentioning

confidence: 99%

“…From the studies, it is clear that so many studies have been carried out on the impact of indirect tax and direct tax on economic growth in Nigeria (Hakim, 2020;Neog & Gaur, 2020;Ogundana et al, 2017), oil revenue, and oil price on economic growth. Inflation, exchange rate, unemployment, investment, external debt and total debt on foreign reserves and economic growth, (Akpan, 2016;Asagunla & Agbede, 2018;Farouk et al, 2016), Public debt and economic growth (Ochuko & Idowu, 2019;Saungweme & Odhiambo, 2019). But the above literature review has not disclosed any studies that has been carried out on the influence of direct tax, indirect tax, oil revenue, and total debt on foreign reserves in Nigeria.…”

Section: External Reservementioning

confidence: 99%

An investigation of the link between indirect tax, oil receipt, debt on foreign reserves in Nigeria

Kaka¹,

Ado

2020

JCA

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The main objective of the study was to investigate the influence of indirect tax, direct tax, oil revenue, total debt on foreign reserves in Nigeria from 1980 to 2019. Ex post factor research design was adopted in this research and data was analyzed with the aid of Ordinary Least Square multi linear regression technique. The study found out that, there is a negative and statistically significant influence of indirect tax and direct tax on foreign reserves in Nigeria. Similarly, it was discovered that oil revenue and total debt has positive and non-statistical significant influence on foreign reserves. The study concluded that there is an influence of oil revenue and total debt on foreign reserves, as well as no influence of indirect tax and direct tax on foreign reserves. In addition, the lack of influence of indirect tax and direct tax shows that government has not being taking advantage of its taxation to generate enough revenue to meet its expenditures, as well as boost foreign reserves. And suggested that government should not depend mainly on oil revenue to meet expenditure and sustain its foreign reserves, but should try as much as possible to diversify the economy towards the creation, encouragement and sustenance of small scale and medium industries, and the development and extraction of non-oil mineral resources for export to boost its foreign reserves. Lastly, government should enhance its revenue generation in taxes to meet its expenditures to give room for the revenue generated through crude oil to increase foreign reserves.

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Factors influencing the ability to honour debt repayment obligations by Governments in Africa

Abotsi

2021

Int. J Fin Econ

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The debt overhang in the 1990s among African countries significantly constrained fiscal space and had a devastating effect on economic development. With the current rising levels of public debt, this study seeks to explore the factors that influence the ability of governments to honour their debt repayment obligations. The study used secondary data from the World Development Indicators and World Economic Outlook. The frequency of the data is annual from 1980 to 2019. The fixed and random effects panel data estimation technique was deployed. Deploying fixed and random panel data estimation techniques while controlling for other variables, the study shows that government gross debt and total investment have a positive influence on the ability to honour debt repayment obligations while government expenditure and current account balance have a negative influence. Prudent government expenditure, financing of productive public investment, and implementation of export‐oriented policies are recommended.

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Government debt, government debt service and economic growth nexus in Zambia: a multivariate analysis

Cited by 39 publications

References 33 publications

Public debt and economic growth: contemporary evidence from a developing economy

Public debt and economic growth: contemporary evidence from a developing economy

An investigation of the link between indirect tax, oil receipt, debt on foreign reserves in Nigeria

Factors influencing the ability to honour debt repayment obligations by Governments in Africa

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