Foreign or Domestic Public Debt for Cameroon’s Development? An Externality Approach

Nelson Derrick Nguepi, Ibrahim Ngouhouo and Irina Bilan ()
Additional contact information
Nelson Derrick Nguepi: Research Group in Applied Economics and Development (GREAD), Faculty of Economics and Management, University of Dschang, Dschang P.O. Box 96, Cameroon
Ibrahim Ngouhouo: Research Group in Applied Economics and Development (GREAD), Faculty of Economics and Management, University of Dschang, Dschang P.O. Box 96, Cameroon
Irina Bilan: Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi, Bvd. Carol I No. 11, 700506 Iasi, Romania

Sustainability, 2024, vol. 16, issue 16, 1-27

Abstract: Public debt plays a major role in financing projects that support economic growth and sustainable development. As governments may choose between domestic and external borrowing, a comprehensive assessment of their effects would support this choice. Our study provides an integrative view of economic and social outcomes and compares, through externalities, the impacts of external and domestic public debt as methods of financing development, with a focus on the Cameroonian economy. Utilizing a dynamic computable general equilibrium (CGE) model and a microsimulation analysis, we find that domestic debt has more advantages for Cameroon compared to external debt, as it increases the large-scale economic impact by improving household welfare, boosting GDP growth, and progressively reducing poverty and inequality. It is therefore recommended that the Cameroonian government focus on increasing the use of domestic debt as a method of financing development by implementing policies that support domestic saving and promote the development of domestic debt markets.

Keywords: external debt; domestic debt; development; well-being; dynamic CGE model; microsimulation analysis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/16/7169/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/16/7169/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:16:p:7169-:d:1460660

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().