Government debt, government debt service and economic growth nexus in Zambia: a multivariate analysis

Talknice Saungweme and Nicholas Odhiambo

Cogent Economics & Finance, 2019, vol. 7, issue 1, 1622998

Abstract: This paper explores the causal relationships between public debt and economic growth, and between public debt service and economic growth in Zambia for the period from 1970 to 2017. Unlike previous studies on this subject that relied on bivariate frameworks, this paper includes fiscal balance and savings as intermittent variables to minimise the problem of omission-of-variable bias. Using a dynamic multivariate autoregressive-distributed lag (ARDL)-bounds testing approach, the results indicate that there is unidirectional Granger-causality from economic growth to public debt in Zambia, irrespective of whether the analysis is done in the short run or in the long run. The study results, however, fail to find any causality between public debt service and economic growth in Zambia. These study findings support the hypothesis that the pace of economic growth matters in defining the level of public sector indebtedness. The study, therefore, recommends that the Zambian government should channel borrowed funds towards the expansion and diversification of the country’s economy. This will promote its long-term economic growth, broaden its revenue base, and enhance its ability to repay its financial obligations when they fall due.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://hdl.handle.net/10.1080/23322039.2019.1622998 (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:7:y:2019:i:1:p:1622998

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

DOI: 10.1080/23322039.2019.1622998

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 ().