Public debts, fiscal balance and sustainability: What can African governments learn from debt sustainability models?

Gladys A. Abindaw Nabieu, Michael Minlah and David Mensah

Cogent Economics & Finance, 2023, vol. 11, issue 2, 2235827

Abstract: This paper examines the impact of public debt on fiscal balance. This study uses the standard debt equation in a fiscal reaction and impulse response functions framework to assess the trajectory of public debt and its sustainability within the Sub-Sahara region from 1980–2017. From the estimations of the fiscal reaction function, the lagged primary balance significantly affects the fiscal deficits of Sub-Saharan African countries. Also, public debts to the gross domestic product beyond a threshold of fifty percent are positive and significantly associated with the primary balance. Fiscal deficits contribute to increases in the debt stock of about 120% over the ten-year for the Sub-Sahara region. The results imply that fiscal governance is required to constrict fiscal deficits whenever debt stock levels approach a certain threshold and growth. Therefore, stakeholders should implement enhanced fiscal policy rules on fiscal balance, public debts, and economic growth to improve debt sustainability.

Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/23322039.2023.2235827 (text/html)
Access to full text is restricted to subscribers.

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:taf:oaefxx:v:11:y:2023:i:2:p:2235827

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/OAEF20

DOI: 10.1080/23322039.2023.2235827

Access Statistics for this article

Cogent Economics & Finance is currently edited by Steve Cook, Caroline Elliott, David McMillan, Duncan Watson and Xibin Zhang

More articles in Cogent Economics & Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().