scholarly journals Impact of Shocks to Public Debt and Government Expenditure on Human Capital and Growth in Developing Countries

2014 ◽  
Vol 6 (1) ◽  
pp. 44-67 ◽  
Author(s):  
Grace G. Kgakge-Tabengwa
Keyword(s):  
Developing Countries ◽  
Human Capital ◽  
Public Debt ◽  
Government Expenditure ◽  
Output Growth ◽  
Sustainable Growth ◽  
Debt Management ◽  
Positive Role ◽  
Fiscal Constraints ◽  
The Government

This paper examines the implications of shocks to public debt and government expenditure on the development of human capital and growth within a model that explicitly recognizes the role of fiscal constraints through introducing the government budget constraint for a set of selected developing countries 1 from 1980-2013. This is mainly to capture fiscal challenges facing developing countries in developing human capital which is fundamental for sustainable growth. The dynamics of our model results reveal that high stocks of public debt, beyond the 30-40% debt/GDP threshold, depress the effect of human capital on output growth through limiting government expenditure resources available for developing human capital. Although we find that government expenditure has a positive role to play in developing human capital, sustainability becomes questionable particularly for countries where there are fiscal constraints. We conclude that developing countries which face fiscal challenges such as high public debt and poor revenue prospects to back government expenditure sustainably, cannot solely develop human capital based on the strength of their domestic resources, underscoring the need for specific supportive global fund for human capital development. The key policy implication calls for public debt management strategies and efficient government expenditure management frameworks supported by sustainable revenue prospects to provide fiscal sustenance impetus to enhance the growth process in developing countries.

scholarly journals UNEMPLOYMENT AND ECONOMIC GROWTH IN NIGERIA: DOES OKUN’S LAW MATTERS?

10.23856/3203 ◽  
2019 ◽  
Vol 32 (1) ◽  
pp. 26-37
Author(s):  
Oluwaseyi Adedayo Adelowokan ◽  
Adeteji Olusegun Оkutimiren
Keyword(s):  
Economic Growth ◽  
Population Growth ◽  
Unemployment Rate ◽  
Government Expenditure ◽  
Output Growth ◽  
Sustainable Growth ◽  
Okun’S Law ◽  
Okun's Law ◽  
The Government ◽  
The Impact

The situation in Nigeria is rapid population growth with high level of unemployment rate. The theoretical proposition of the Okun’s law suggests an indirect relationship existing between unemployment and output growth. This study tests the validity of Okun’s law by examining the impact of youth employment generation on sustainable growth in the Nigerian economy. We modeled real gross domestic product against unemployment rate, population growth, labour and government expenditure between 1986 and 2017. The empirical findings show that there is short- and long- run relationship existing between unemployment rate, population growth and output growth in Nigeria. Hence, study recommends that the activities by the government in promoting economic growth in the country should be geared towards promoting employment for the people in other sector.

scholarly journals Re-testing Wagner's Law: Structural breaks and disaggregated data for South Africa

2017 ◽  
Vol 9 (4(J)) ◽  
pp. 49-61
Author(s):  
Mthokozisi Mlilo ◽  
Matamela Netshikulwe
Keyword(s):  
South Africa ◽  
Structural Breaks ◽  
Government Expenditure ◽  
Active Role ◽  
Output Growth ◽  
Causality Test ◽  
Wagner’S Law ◽  
Education Expenditures ◽  
Wagner's Law ◽  
The Government

Direction of causality between government expenditure and output growth is pertinent for a developing country since a sizeable volume of economic resources is in the hands of the public sector. This paper investigates the Wagner's law in South Africa over the post-apartheid era, 1994-2015. This paper is unique to present studies since it uses disaggregated government expenditure and controls for structural breaks. The Granger non-causality test of Toda & Yamamoto, a superior technique compared to conventional Granger causality testing, is employed and this paper finds no support for Wagner's law. However, there is causality running from total government and education expenditures to output. This finding is in line with the Keynesian framework. It is recommended in the paper that the government should take an active role in promoting output growth through increases in education expenditures in particular.

scholarly journals Public Debt Management and The Country’s Financial Stability

Studia Humana ◽  
2021 ◽  
Vol 10 (3) ◽  
pp. 10-18
Author(s):  
Piotr Misztal
Keyword(s):  
Public Debt ◽  
Financial Stability ◽  
Management Practices ◽  
Significant Risk ◽  
Debt Management ◽  
State Budget ◽  
Domestic Capital ◽  
Public Debt Management ◽  
The Government ◽  
Polish Economy

Abstract The government debt portfolio is usually the largest financial portfolio in the country. It often contains complex and risky financial structures and can generate significant risk to the state budget and the country’s financial stability. Therefore, governments are required to have sound risk management and sound public debt structures to limit exposure to market risk, debt financing or rolling risk, liquidity risk, credit, settlement and operational risk. In recent years, the debt market crises have highlighted the importance of sound public debt management practices and related risks, and the need for an effective and well-developed domestic capital market. This may reduce the vulnerability of the economy to adverse economic and financial shocks. However, it is also important for the government to maintain a macroeconomic policy that ensures sound fiscal and monetary management. The aim of the research is to present the theoretical and practical aspects of extremely important issues such as public debt management and to indicate the most important implications for the financial stability of the country on the example of the Polish economy. The study uses a research method based on literature studies in the field of macroeconomics, economic policy and finance, as well as statistical analysis of the studied phenomenon. Results of research indicate that effective public debt management can reduce the economy’s vulnerability to financial threats, contribute to the financial stability of the country, maintain debt stability and protect the government’s reputation among investors.

Public debt, foreign direct investment and economic growth dynamics

2019 ◽  
Vol 14 (5) ◽  
pp. 769-791 ◽  
Author(s):  
Olugbenga Onafowora ◽  
Oluwole Owoye
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Public Debt ◽  
Unit Root ◽  
Variance Decomposition ◽  
Output Growth ◽  
Debt Management ◽  
Unique Contribution ◽  
Content Type ◽  
Positive Effects

Purpose The purpose of this paper is to examine the dynamic and long-run relationships among public debt, FDI and output growth in five individual Caribbean countries over the period 1975–2015. Design/methodology/approach Zivot and Andrews (1992) unit root test with structural break is used to examine the stationarity of the variables and then the autoregressive distributed lag bounds testing procedure is used to ascertain existence of cointegration among them. Finally, order-invariant generalized forecast error variance decomposition (GFEVD) is used to establish the strength of the causal relationship between the examined variables. Findings The results confirm that the examined variables are cointegrated. FDI, domestic investment, trade openness, human capital (HC) and institutional quality were found to have significantly positive effects on economic growth, while higher public debt and inflation rates hampered growth. GFEVD revealed unidirectional Granger causality running from FDI to economic growth in two countries; unidirectional causality from growth to FDI in two other countries; and bidirectional causality between growth and FDI in one other country. The results also indicate one-way causality from output growth to public debt in three countries and bidirectional causality between these two variables in two other countries. Practical implications The implication is that the Caribbean Governments may need to adopt effective debt management as a major policy and intensify efforts at utilizing loans obtained judiciously for human and capital projects that have direct positive net present value but, to secure strong and inclusive growth, these strategies must be linked to policies that enhance macroeconomic stability and the quality of their institutions, encourage capital inflows and domestic investments vis-à-vis domestic savings, and increase HC and trade earnings. Originality/value In contrast to extant studies of the public debt–FDI–output growth nexus, this study controls for the possibility of structural breaks in unit root tests along with performing bounds test for cointegration, variance decomposition analysis, Granger causality tests, and CUSUM and CUSUMSQ tests for the stability of the dynamic output growth model. This is a unique contribution to the existing literature, and highlights the originality value of this paper.

IMF will worry about Cairo's debt burden later

2017 ◽  
Keyword(s):  
Interest Rate ◽  
Public Debt ◽  
Government Expenditure ◽  
Fiscal Year ◽  
Indirect Taxation ◽  
Content Type ◽  
The Public ◽  
Debt Burden ◽  
The Government ◽  
Domestic Interest Rate

Significance The review will take into account the effects of measures taken thus far, in particular the flotation of the Egyptian pound, and will assess the government’s budget for the 2017-18 (July-June) fiscal year. Impacts The government will struggle to reduce the deficit because of the scale of public debt and the record high domestic interest rate. Government expenditure on wages will rise at a much lower rate than inflation. The public will also face further rises in indirect taxation, revenue from which is projected to rise by 40%. The IMF is unlikely to raise any serious objections to the government’s plans.

scholarly journals Public Debt Management and Macroeconomics Policies Coordination: Evidence from Jordan

2021 ◽  
Vol 9 (36) ◽  
pp. 59-72
Author(s):  
Jumah Ahmad Alzyadat
Keyword(s):  
Public Debt ◽  
Tax Evasion ◽  
Government Expenditure ◽  
Impulse Response Function ◽  
Policy Instruments ◽  
Debt Management ◽  
Dynamic Interactions ◽  
Monetary Policies ◽  
Vector Error Correction ◽  
Vector Error

This study aimed to analyze the effects of fiscal and monetary policies interactions on public debt in Jordan during (1970 – 2019). Using Vector Error Correction Model (VECM) derived from VAR (Vector Auto regression), and examine dynamic interactions between economic variables over time, by Appling Impulse Response Function, and Variance Decomposition. The results indicated that the fiscal policy instruments affect public debt in two different directions, the expansion of government expenditure positively affect public debt, while tax revenues reduce indebtedness. The monetary policy instruments affect public debt in the same directions, as the results indicated that the central bank in controlling money supply and managing interest rate helps the fiscal authority in reducing the public debt in Jordan. The results confirm the strongest impact of government expenditure on public debt in Jordan. The study recommends the necessity of rationalizing government expenditures and combating tax evasion. In addition, more coordination between fiscal and monetary policies.

scholarly journals Vietnam’s future public debt: Prospects and implicantions

2020 ◽  
Vol 4 (3) ◽  
pp. 963-972
Author(s):  
Vi Hoang Dinh
Keyword(s):  
Public Debt ◽  
Budget Deficit ◽  
Dynamic Models ◽  
Current Trend ◽  
Debt Management ◽  
Policy Implications ◽  
Basic Scenario ◽  
Sustainability Of Public Debt ◽  
Public Debt Management ◽  
The Government

By the end of 2017, VietNam's public debt had reached 3.1 million billion VND; 2.2 times higher than the end of 2011 (1,393 million VND). The ratio of public debt/GDP of Vietnam has increased rapidly in recent year, since 2011. Specifically, within only 5 years from 2011 to 2015, the ratio of public debt / GDP of Vietnam increased by 12.2 percentage points, from 50% to 62.2%. Although, the Government of Vietnam has made strong commitments to control public debt. But the actual results are not as expected and tend to get worse. With the current trend of increasing the size and risk of public debt, it is necessary to forecast the public debt and make policy implications on public debt management. Therefore, the author analyzed the state of Vietnam's budget deficit and public debt. Since the author used dynamic models Cechetti, Mohanty and Zampolli (2010) to forecast Vietnam's public debt trends to 2030, with three scenarios: The basic scenario is that there is no improvement in the balance of budget the Basic scenario is no improvement in the basic budget balance, the Bad scenario is the high budget deficit. From there, implications on public debt management that aim to increase the sustainability of public debt in VietNam.

scholarly journals The Effect of Foreign Debt And Taxation on Government Expenditure In Kenya

2021 ◽  
Vol 04 (06) ◽  
Author(s):  
Dr. Angela Mucece Kithinji ◽  
Keyword(s):  
Developing Countries ◽  
Public Expenditure ◽  
Foreign Debt ◽  
Government Expenditure ◽  
Secondary Data ◽  
Joint Effect ◽  
National Bureau ◽  
National Economic ◽  
The Government ◽  
Correlation Statistics

Cases of high levels of public debt have mostly been reported in many developing countries part of which is debt borrowed abroad. Foreign debt is more preferable by many developing countries because it is cheaper to service in terms of interest costs. These countries tax their citizens heavily to raise enough finances to pay foreign debt. It was thus feasible to establish the influence of the foreign debt and taxation on expenditure of the Kenyan government. The study employed a causal research design. The period under study ranged from 2002 to 2017. The study used secondary data which was extracted from the National Bureau of Statistics, and National Economic Surveys which were available at the Government of Kenya website. Correlation statistics were conducted to establish the association between variables. Regression analysis was used to establish the effect of foreign debt and taxation on government expenditure in Kenya. The findings revealed that foreign debt and taxation influences government expenditure individually. However, on the test of the joint effect, only taxation was found to influence public expenditure significantly unlike foreign debts.

Do We Have to Rethink Sovereign Debt of Developing Countries?

2021 ◽  
pp. 499-517
Author(s):  
Wissem Ajili
Keyword(s):  
Developing Countries ◽  
Public Debt ◽  
Sovereign Debt ◽  
Debt Management ◽  
Future Generations ◽  
Social Progress ◽  
Comprehensive Management ◽  
Standards Of Living ◽  
Political Choices ◽  
Ecologically Sustainable

The chapter joins new reflections interested in measuring welfare and social progress. The main objective is to determine whether the sovereign debt management process in developing countries is economically viable, socially equitable, and ecologically sustainable. The analysis advocates rethinking the sovereign debt around the idea of social sustainability, that is, the non-questioning of the living conditions of present and future generations and their economic, social, and political choices. The chapter suggests the need for developing countries (1) to ensure a comprehensive management of public debt based on the co-responsibility of both the indebted countries and their creditors, (2) to borrow in priority to finance the most productive investment expenditures, which can have an impact on the populations' standards of living and on economic prosperity, and (3) to reduce the use of austerity programs and anti-social policies.

Sign in / Sign up

Export Citation Format

Share Document