Key Drivers of Public Debt Levels: Empirical Evidence from Africa

Seth Nana Kwame Appiah-Kubi, Karel Malec, Joseph Phiri, Mikhail Krivko, Kamil Maitah, Mansoor Maitah () and Lubos Smutka
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Karel Malec: Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences in Prague, 16500 Prague, Czech Republic
Joseph Phiri: Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences in Prague, 16500 Prague, Czech Republic
Mikhail Krivko: Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences in Prague, 16500 Prague, Czech Republic
Kamil Maitah: Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences in Prague, 16500 Prague, Czech Republic

Sustainability, 2022, vol. 14, issue 3, 1-15

Abstract: The rising public debt level in Africa and the sustainability of that debt remains an important research agenda. As such, understanding the factors that impact the rising public debt level in Africa remains an important research agenda. Our paper investigates the key determining drivers that have a direct and indirect impact on the rising level of public debt in Africa from a panel of 47 African nations for the period 2000–2018. Using the generalized method of moments (GMM) and fixed effects two-stage least squares (IV-FE) methodological approach the study confirms that a rise in the corruption level leads to an increase in the public debt in Africa. Our findings additionally indicate that government investment enhances the positive and significant association with public debt levels in the sampled countries. Our result revealed that government consumption and tax revenue have a significant negative relationship with the levels of public debt in Africa. Lastly, our results showed that military expenditure has a positive but insignificant relationship with public debt levels in Africa. In terms of policy recommendation, the study suggests African countries should intensify the fight against corruption and strengthen political and governance institutions that will help reduce public debt levels and promote economic growth and development.

Keywords: corruption; public debt; government investment; government consumption; military expenditure; tax revenue (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:3:p:1220-:d:730302

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