Fiscal rules, fiscal performance and economic growth in Sub‐Saharan Africa
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Date
2021
Journal Title
Journal ISSN
Volume Title
Publisher
African Development Review
Abstract
Over the past four decades, many economies have striven to find permanent
solutions to persistent increases in public deficits and deterioration of growth.
For most economies, the solution to this problem was the adoption of fiscal
rules. This paper presents empirical evidence on the effects of fiscal rules on
fiscal performance and economic growth using a dataset of 43 countries in
Sub‐Saharan Africa over 27 years. The study applies simultaneous equation
models to determine the relationship between performance and growth in the
public sector and also to avoid structural equation and endogeneity biases. The
results show that fiscal rules significantly foster fiscal performance and
decelerate growth. The study further finds the expenditure rules to be most
effective in influencing fiscal balance and economic growth. The robust
estimates further confirm that expenditure rules and government spending
efficiency are necessary for promoting fiscal outcomes and economic growth.
The study recommends the implementation of more revenue rules, debt rules, and balance budget rules to ameliorate the negative effects of government
spending on economic growth. In addition, Sub‐Saharan African economies
should carefully consider the rules applied to government spending since fiscal
rules on productive spending will impede economic growth.
Description
Research Article
Keywords
economic growth, fiscal performance, fiscal rules, public debt, SSA
Citation
Nabieu, G. A. A., Bokpin, G. A., Osei, A. K., & Asuming, P. O. (2021). Fiscal rules, fiscal performance and economic growth in Sub‐Saharan Africa. Afr Dev Rev, 33, 607–619. https://doi.org/10.1111/1467-8268.12595