Government size, public debt and real economic growth: a panel analysis

DiPeitro, William R.; Anoruo, Emmanuel

doi:10.1108/01443581211255620

Cited by 28 publications

(23 citation statements)

References 6 publications

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“…The governing party knowing this makes effort to show their capability by manipulating economic policies prior to elections, which leads to fiscal deficits and high inflation in an election year. And as found by William and Emmanuel (2012), high government indebtedness affects economic growth negatively. Block (2002) shows evidence of the presence of PBCs in the emerging democracies of the developing countries.…”

Section: Theoretical Argumentmentioning

confidence: 96%

Political business cycles and economic growth in Africa

Iddrisu

Bokpin

2018

JES

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Purpose The purpose of this paper is to understand both the incidence and the impact of the African political business cycle (PBC) in the light of a literature which has argued that, with major extensions of democracy since the 1990s, the cycle has both become more intense and has made African political systems more fragile. It answers two very important macroeconomic questions crucial to the validity of the opportunistic model. It, first, answers the question of whether election cycles contribute to money growth in the light of government expenditure, and second, whether election cycles have an effect on economic growth in the light of money supply. Design/methodology/approach The study employs data from 39 African countries from 1990 to 2014 to address these important empirical questions using panel regression techniques. Findings The paper found PBC to be present in Africa. It also found that such cycles do not translate to economic performance in African countries. The paper therefore indicates the need for African policy makers to take measures to eliminate or lessen the scale of PBCs. Social implications There are many ways in which today’s political choices affect future well-being. Recently, economists have concluded that we pass on the inflationary (or deflationary) consequences of current policies to the future generation. Originality/value This paper is unique in its approach to investigate the objectives.

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Section: Theoretical Argumentmentioning

confidence: 96%

Political business cycles and economic growth in Africa

Iddrisu

Bokpin

2018

JES

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“…This generalization has resulted in ideological differences among various economists on the effect of increasing capital flows on macroeconomic indicators. Whereas extant empirical studies (Eberhardt & Presbitero, 2015;Gui-Diby, 2014;Sulaiman & Azeez, 2012;Sedik & Sun, 2012;Mody & Murshid, 2011;Aizenman & Spiegel, 2006;Sachs et al, 2004) support this assertion; other evidences especially from Sub-Saharan Africa (SSA) suggest contrasting results in the absence of some mitigating factors (Mensah, Bokpin, & Boachie-Yiadom, 2018;Agbloyor, Gyeke-Darko, Kuipo, & Abor, 2016;Zouhaier & Fatma, 2014;Panizza & Presbitero, 2014;DiPeitro & Anoruo, 2012;Presbitero, 2008).…”

Section: Introductionmentioning

confidence: 99%

“…It is clear that government borrowing is necessary for the government in order to meet budgetary promises. Debt is not entirely bad as some studies have painted it (DiPeitro & Anoruo, 2012;Easterly, 2003;Collier & Dollar, 2002) but it depends on how the debt is used. If government debt goes into the right investment, it could pay for itself and trigger growth.…”

Section: Introductionmentioning

confidence: 99%

Investment and Growth Amidst Widening Government Debt: “The Ghanaian Story”

Mawutor

Yiadom

Amankwa

2019

AJFA

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The study revisits the debt-growth nexus and broadens the argument to examine the unique effect of government debt on investment in Ghana. Data from World Development Indicators on the Ghanaian economy were sampled from 1990 to 2015. The empirical results from the Multiple Linear Regression (MLR) suggest an inverse relationship between government debt and economic growth in Ghana. In addition, a percentage increase in government debt reduces investment by 0.65%; implying that government debt harms investment due to fungibility of debt and accompanying debt repayment responsibilities. Policy ramifications resulting from the study are that the Ghanaian government should restructure public debt management to eliminate debt fungibility and reduce debt to GDP ratio as well.

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“…The seriousness of this issue, especially in Africa, is exacerbated by the recent global financial crisis and the quest by various governments around the world to revamp their economy with borrowed funds [1,2]. For several reasons, developing countries tend to rely on borrowed funds, foreign equity portfolio investment (FEPI) and foreign direct investment (FDI) flows to harness and grow the economy [3,4]. Moreover, given the low level of domestic economic activities to guarantee quality internally generated funds, the use of external debt by developing countries to address the challenges of economic growth and development has become an issue of a necessity that is difficult to avoid rather than a choice.…”

Section: Introductionmentioning

confidence: 99%

Dynamic Relations Between Public External Debt and Economic Growth in African Countries: A Curse or Blessing?

Ehikioya

Omankhanlen

Osuma

et al. 2020

Journal of Open Innovation: Technology, Market, and Complexity

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This paper used the Johansen Cointegration test and system Generalised Method of Moments (sysGMM) to examine the dynamic relations between external debt and economic growth in 43 African countries over the period 2001–2018. The study used data from World Development Indicators (WDI) as published by the World Bank and the World Economic Outlook database as provided by the International Monetary Finance (IMF). The study provides an understanding of how the importance of external debt could be short-lived due to its misapplication. The result reveals evidence to support a long-run equilibrium relationship between external debt and economic growth in Africa. The result demonstrates that beyond a specific capacity, the short-run converges to equilibrium in the long-run and external debt would start to have a deteriorating impact on economic growth in Africa. The findings of this study reinforce the need for policymakers to ensure proper application of external debt on economic activities that would lead to sustained long-term economic performance. Moreover, the government and development partners must put in place a monitoring mechanism to ensure the efficient use of borrowed funds.

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Government size, public debt and real economic growth: a panel analysis

Cited by 28 publications

References 6 publications

Political business cycles and economic growth in Africa

Political business cycles and economic growth in Africa

Investment and Growth Amidst Widening Government Debt: “The Ghanaian Story”

Dynamic Relations Between Public External Debt and Economic Growth in African Countries: A Curse or Blessing?

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