Public Policies and Private Savings and Investment in Sub-Saharan Africa: An Empirical Investigation

Dhaneshwar Ghura and Michael Hadjimichael

No 1995/019, IMF Working Papers from International Monetary Fund

Abstract: This paper assesses empirically the role of public policies in stimulating private savings and investment in sub-Saharan African countries, based on data for the period 1986-92. The main findings of the analysis are as follows: (i) policies effective in stimulating private savings and investment include those that keep the rate of inflation low, reduce macroeconomic uncertainty, promote financial deepening, and lower the external debt burden; (ii) measures that promote structural reforms and reduce the budget deficit (without lowering government investment) help to raise private investment; and (iii) declines in government savings are only partially offset by increases in private savings.

Keywords: WP; broad money; government investment; rate of inflation; government investment ratio; substitution effect; investment ratio; dependency ratio; GDP ratio; government savings; investment decision; investment model; investment expenditure; government investment expenditure; age dependency ratio; Private investment; Private savings; Real effective exchange rates; Government debt management; Income; Sub-Saharan Africa; Africa (search for similar items in EconPapers)
Pages: 48
Date: 1995-02-01
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1995/019

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