Impact of Budget Deficit on Private Consumption inWAEMU Countries: Evidence from Pooled Mean Group Estimation

Keho, Yaya

doi:10.5539/ijef.v8n3p189

Cited by 6 publications

(8 citation statements)

References 26 publications

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“…With the coefficient of -0.192, private consumption will significantly decrease by 0.19 percent as a result of a 1 percent increase in government spending in Sub-Sahara African countries. Thus, fiscal policies that promote excessive government spending might have adverse impacts on private consumption (Keho 2016). Again, it was apparent from the results that government spending maintained its expected signs in the short run just like in the long run.…”

Section: Mean Group and Pooled Group Estimatesmentioning

confidence: 92%

“…His results exhibited the evidence of Keynesian debt non-neutrality in Zimbabwe. Also, Keho (2016) noted that, in the longrun, budget deficit and GDP per capita have significant positive effects on private consumption, whilst inflation is detrimental to private consumption in the West African Economic and Monetary Union (WAEMU) member countries. This implies that limiting the size of the budget deficits might have a deleterious effect on the development of WAEMU member countries.…”

Section: Literaturementioning

confidence: 99%

“…This implies that an increase in GDP per capita causes an upsurge in the average level of private consumption. In relation to Keho (2016), economic growth has been effective in increasing the average level of private consumption, even though it has not resulted in poverty reduction in the West African Economic and Monetary Union member countries.…”

Section: Mean Group and Pooled Group Estimatesmentioning

confidence: 99%

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Ricardian Equivalence Hypothesis in the Sub-Sahara African Countries

Pickson¹,

Ofori-Abebrese²

2018

Journal of Economic Integration

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The validity of the Ricardian equivalence proposition remains disputed in spite of the numerous empirical studies. This study utilized panel ARDL estimation approach to investigate the evidence of Ricardian Equivalence Hypothesis in five Sub-Sahara African countries, namely Botswana, Ghana, Gambia, Nigeria, and Kenya over the period of 1981~2014. The results show that GDP per capita and interest rate have significant positive impacts on private consumption, whereas government debt, government spending, and government interest payment on the outstanding debt have negative impacts on private consumption. From the perspective of this study, the Ricardian equivalence hypothesis, which states that private consumption remains unchanged regardless of government's spending, does not hold in Sub-Sahara African countries.

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Section: Mean Group and Pooled Group Estimatesmentioning

confidence: 92%

Section: Literaturementioning

confidence: 99%

Section: Mean Group and Pooled Group Estimatesmentioning

confidence: 99%

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Ricardian Equivalence Hypothesis in the Sub-Sahara African Countries

Pickson¹,

Ofori-Abebrese²

2018

Journal of Economic Integration

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“…The long-run slope homogeneity hypothesis is tested via a Hausman test, where under the null hypothesis, the difference in the estimated coefficients between the MG and PMG is not significantly different and PMG is not significantly different and PMG estimators are consistent and more efficient than MG estimators (Pesaran et al, 1999). Adusah-Poku (2016), Kehoy (2016), Bangake and Eggoh (2012) and Ndambendia and Njoupouognigni (2010) used the PMG technique for estimation of their econometric models.…”

Section: Oda and Economic Growthmentioning

confidence: 99%

The impact of foreign capital inflows on economic growth on selected African countries

Mowlaei

2018

AJEMS

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Purpose Nowadays, foreign capital inflow (FCI) is considered as a catalyst for economic development and an important source of transferring technology and foreign exchange earnings from developed to developing countries. The purpose of this paper is to study, first, the impact of different forms of FCIs, namely, foreign direct investment (FDI), personal remittances (PR) and official development assistant (ODA) on economic growth on 26 top African countries; and, second, which of them is more effective on economic growth of the studied countries. The results of this paper are very important for host governments’ policy and help them to design their economic plans to absorb the suitable foreign inflow. Design/methodology/approach The paper uses Pooled Mean Group (PMG) econometric technique to estimate the heterogeneous panels over the period 1992–2016. Findings The results of the study show that all three forms of FCIs have positive and significant effects on economic growth in the long and short run. However, the PR had the most effect on economic growth in the long and short run. The study suggests that the governments should design and implement appropriate fiscal, monetary and trade policies in order to create and improve an enabling environment to attract FCIs as a supplementary source of domestic investment. Research limitations/implications The research limitations of this paper are as follows: data sets of FDI, PR and ODA were available not for all African countries; and, data sets that were available were of before the year 1992. Thus, the research is done for the African countries which had the data sets after the year 1992. Practical implications The result of this paper indicates the impact of each FDI, PR and ODA in economic growth. So, countries can take more attentions to each of them on economic planning. Social implications FCIs are one of the important external source of exchange for each country. So, the study of importance of each of them is necessary for economic planning. Originality/value Most of the previous studies have examined the impact of three different forms of FCIs on economic growth separately, on different countries and regions and using various models and econometric techniques. One of the contributions of this paper is focused on the impacts of FDI, PR and ODA on economic growth separately and simultaneously in 26 top recipient African countries and using the PMG technique which is an advanced econometrical estimation and studied less about it. The other contribution of this research is the comparison of the impact of different FCIs on economic growth, and it is very important for governments’ economic policy.

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“…They concluded that REH fails in Pakistan due to the limitless horizon and lack of money. Keho (2016) discovered that in the long run, the budget deficit and GDP per capita have large positive effects on private consumption, but inflation has a negative impact in the West African Economic and Monetary Union (WAEMU) member nations, Ofori-Abebrese and Pickson (2018) studied five Sub-Sahara African countries: Botswana, Ghana, Gambia, Nigeria, and Kenya between 1981 and 2014. They investigated the evidence of REH using the panel Autoregressive Distributed Lag Approach (ARDL).…”

Section: Introductionmentioning

confidence: 99%

Checking the Validity of Ricardian Equivalence Hypothesis: Analysis from Developed and Developing Countries

Nasir¹

2022

JDSS

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The existence of the Ricardian Equivalence Hypothesis (REH) in the case of the Group of Seven (G7) and the South Asian Association of Regional Cooperation (SAARC) nations is investigated in this study. The objective of this study is check the idea that combining the cases of industrialized and emerging economies will demonstrate REH. General Government Revenue, Government Budget Deficit, General Government Gross Debt, Household Final Consumption Expenditure, Disposable Income, General Government Total Expenditure, and Wealth are all measured using a panel data set from 2001 to 2021.Five distinct unit root tests were used to validate the stationarity of selected variables. Considering the Hausman test, researcher estimate the random effect model before Panel Least Squares (PLS). The Wald test has rejected all restrictions applied to verify the presence of REH in developed and emerging economies after applying PLS. According to the Findings the Fiscal policy should be one of the stabilizing measures in this understudied economic world to regulate income and expenditures.

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Impact of Budget Deficit on Private Consumption inWAEMU Countries: Evidence from Pooled Mean Group Estimation

Cited by 6 publications

References 26 publications

Ricardian Equivalence Hypothesis in the Sub-Sahara African Countries

Ricardian Equivalence Hypothesis in the Sub-Sahara African Countries

The impact of foreign capital inflows on economic growth on selected African countries

Checking the Validity of Ricardian Equivalence Hypothesis: Analysis from Developed and Developing Countries

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