Do fiscal measures stimulate private investment in Africa?

Olatunji Shobande and Chidi Ndubuisi Olunkwa ()
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Chidi Ndubuisi Olunkwa: Department of Economics, Faculty of Social Sciences, University of Lagos, Akoka, Yaba, Lagos, Nigeria

Journal of Economics and Political Economy, 2018, vol. 5, issue 3, 343–352

Abstract: The study inspects the effect of fiscal measures on private investment in selected African countries between 1980–2016. The study adopts a Panel Autoregressive Distributed Lag (PARDL) bounds testing approach. The long-run estimates show that interest on debt payment, government expenditure, expected inflation, exchange rate, and government tax revenue all have positive relationships with private investment, suggesting fiscal measures crowd in private investment in the long run. However, in the short run, changes in the one-lagged variables have negative impacts, whereas two-lagged variables show positive impacts, indicating that fiscal measures may crowd out private investment in the short run. The paper recommends fiscal discipline for policymakers if private investment is to thrive in Africa.

Keywords: Fiscal Measures; Private Investment; Africa; Exchange Rate (search for similar items in EconPapers)
JEL-codes: E20 E65 H30 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:cvv:journ1:v:5:y:2018:i:3:p:343-352

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