Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264228 
Year of Publication: 
2019
Series/Report no.: 
WAMI Occasional Paper Series No. 17
Publisher: 
West African Monetary Institute (WAMI), Accra
Abstract: 
WAMZ countries have accumulated high levels of public debt less than two decades after the massive debt forgiveness effected under the Highly Indebted Poor Countries (HIPC) initiative. This has raised sustainability concerns as rising debt levels have the potential to create negative spillover effects and derail the macroeconomic convergence process in the Zone. This study examines the response of WAMZ countries to increases in public debt levels. Utilizing pooled OLS and panel fixed effects (FE) on annual data covering the period 2000 - 2018, the study shows positive response of primary balance to changes in the debt to output ratio across WAMZ countries, indicating that public debt were sustainable during the period. Results from the Panel Smooth Transition Regression (PSTR) model indicate significant positive non-linear response of primary balance to increases in the debt ratio below a threshold debt-to-GDP ratio of 90 percent. The study recommends the continuation of fiscal consolidation efforts aimed at enhancing revenue and rationalizing unproductive expenditures in all Member States.
Subjects: 
Public debt
primary balance
Panel Smooth Transition Regression
WAMZ
JEL: 
C33
H62
H63
Document Type: 
Research Report

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.