Budget Deficit and Economic Growth in Sub-Saharan Africa: A PMG Approach

Main Article Content

Gbenga Oladapo Awolaja
Ikponmwosa Osagie Esefo

Abstract

The relationship between budget deficit and economic growth remains one of the widely debated topics among policy makers and economists in both developed and developing countries of the world. This paper empirically investigated the long run and short run relationship between budget deficit and economic growth in sub-Saharan Africa countries from 1991 to 2018 using Panel data for twenty (20) sub-Saharan Africa Countries. The estimation technique employed in the study was the Pooled Mean Group (PMG) estimation method and the regression results revealed that in the long run, budget deficit has a negative and significant relationship with economic growth whereas in the short run, it has a positive and significant relationship with economic growth. The study concluded that government should reduce the overall recurrent expenditure as it will help to mitigate the problem of budget deficit that leads to debt accumulation in sub-Saharan Africa countries and increase expenditure on developmental projects.

Keywords:
PMG, budget deficit and economic growth.

Article Details

How to Cite
Awolaja, G. O., & Esefo, I. O. (2020). Budget Deficit and Economic Growth in Sub-Saharan Africa: A PMG Approach. Asian Journal of Economics, Business and Accounting, 13(3), 1-10. https://doi.org/10.9734/ajeba/2019/v13i330174
Section
Original Research Article

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