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Determinants of Government Debt in Sub-Saharan African Countries: The Role of Conflict, Governance, and Economic Factors

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  • Nikolaidou Eftychia
  • Okwoche Princewill

    (School of Economics, University of Cape Town, Cape Town, South Africa)

Abstract

In recent years, there have been growing concerns around the implications of large fiscal imbalances in sub-Saharan African countries (SSA). An ongoing debate focuses, among other things, on the determinants of public debt in the sub-region. Much of the recent work has, however, employed descriptive methods in quantifying the extent of the debt problem and in explaining the drivers thereof. Moreover, most studies only consider macroeconomic factors. Instead of focusing only on macroeconomic factors, this study considers the influence of conflict and governance as important drivers of public debt in SSA countries given that most of them have experienced (or are still experiencing) conflict and poor governance. Focusing on a sample of 38 SSA countries over the period 1996–2019, it employs a variety of panel methods, namely, the pooled OLS, one- and two-way fixed effects, and instrumental variables fixed effects to facilitate the comparison of results. The study finds compelling evidence showing that conflict and governance are important determinants of SSA’s public debt in addition to the economic factors. Policy recommendations based on the findings are discussed.

Suggested Citation

  • Nikolaidou Eftychia & Okwoche Princewill, 2023. "Determinants of Government Debt in Sub-Saharan African Countries: The Role of Conflict, Governance, and Economic Factors," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 29(2), pages 145-170, May.
    • Handle: RePEc:bpj:pepspp:v:29:y:2023:i:2:p:145-170:n:2
    DOI: 10.1515/peps-2022-0038
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    Keywords

    government debt; conflict; governance; sub-Saharan Africa; pooled OLS; fixed effects;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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