The balance of payments constrained growth model with sustainable debt accumulation, interest payments and the terms of trade: evidence from Sub-Saharan Africa

Shanaz Sumra

No 14664, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre

Abstract: The relevance of a demand-led growth model for long run economic growth is tested for the sub-Saharan African region using an augmented balance of payments constrained growth model which allows for sustainable debt accumulation, interest rate payments and the terms of trade movements. An autoregressive distributive lag (ARDL) model is used to estimate the model for 22 sub-Saharan African economies. Different specifications of the balance of payments constrained growth model are estimated and compared. The results indicate that the region was balance of payments constrained between the 1960 to 2014 period. In addition, the model which allows for sustainable debt accumulation and interest rate payments abroad best explained the growth experience of the region.

Keywords: balance of payments; constrained growth; debt; interest payments abroad; terms of trade; sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: F14 O11 O55 R11 (search for similar items in EconPapers)
Date: 2016-02
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gpe:wpaper:14664

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