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Fiscal Policy, Monetary Policy and Economic Growth in Sub-Saharan Africa

Author

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  • Ubi-Abai, Itoro
  • Ekere, Daniel

Abstract

The study analysed the effects of fiscal and monetary policies on economic growth in a panel of 47 sub-Saharan African economies from 1996 to 2016, using descriptive analysis, the econometric techniques of dynamic panel General Method of Moment and the Dumitrescu- Hurlin causality; the scaling quantity analysis inclusive. The study traced the debate from the Keynesians to the Monetarist. The findings showed that fiscal and monetary policies affected economic growth positively in the sub-region. Moreover, fiscal policy has a greater scale- effect in enhancing economic growth in sub-Saharan Africa. The study concluded that fiscal policy had greater influence on growth than monetary policy. It was recommended, amongst others, that governments of countries in the sub-Saharan region should focus more on formulating and implementing programmes that support productive investments; foster favourable trade; improve productivity of labour; and make the political environment stable.

Suggested Citation

  • Ubi-Abai, Itoro & Ekere, Daniel, 2018. "Fiscal Policy, Monetary Policy and Economic Growth in Sub-Saharan Africa," MPRA Paper 91950, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:91950
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    References listed on IDEAS

    as
    1. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    2. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-1395, November.
    3. World Bank, 2016. "World Development Indicators 2016," World Bank Publications - Books, The World Bank Group, number 23969, December.
    4. Peter Siyan & Adewale Emmanuel Adegoriola, 2015. "The Relative Impact of Money Supply and Government Expenditure on Economic Growth in Nigeria," Economy, Asian Online Journal Publishing Group, vol. 2(3), pages 49-57.
    5. World Bank, 2017. "World Development Indicators 2017," World Bank Publications - Books, The World Bank Group, number 26447, December.
    6. Uche Boniface Ugwuanyi & Okelue David Ugwunta, 2017. "Fiscal Policy and Economic Growth: An Examination of Selected Countries in Sub-Saharan Africa," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 7(1), pages 117-130, January.
    7. Ali F. Darrat, 1984. "The Dominant Influence of Fiscal Actions in Developing Countries," Eastern Economic Journal, Eastern Economic Association, vol. 10(3), pages 271-284, Jul-Sep.
    8. Adewale Emmanuel Adegoriola & Peter Siyan, 2015. "The Relative Impact of Money Supply and Government Expenditure on Economic Growth in Nigeria," Economy, Asian Online Journal Publishing Group, vol. 2(3), pages 49-57.
    9. Matthew Kofi Ocran, 2011. "Fiscal policy and economic growth in South Africa," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 38(5), pages 604-618, September.
    10. Shahid Ali & Somia Irum & Asghar Ali, 2008. "Whether Fiscal Stance or Monetary Policy is Effective for Economic Growth in Case of South Asian Countries?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(4), pages 791-799.
    11. Dallas S. Batten & Rik Hafer, 1983. "The relative impact of monetary and fiscal actions on economic activity: a cross-country comparison," Review, Federal Reserve Bank of St. Louis, vol. 65(Jan), pages 5-12.
    12. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Guivis Zeufack Nkemgha & Eric Mouchili Moumie, 2020. "Growth Effect of Fiscal Policy in Dependent Natural Resources Countries: Case of a Monetary Union," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 8(2), pages 96-105, June.

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    More about this item

    Keywords

    Fiscal Policy; Monetary Policy; Growth; GMM; Dumitrescu-Hurlin; Scaling Quantity;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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