IDEAS home Printed from https://ideas.repec.org/a/ags/afjecr/285002.html
   My bibliography  Save this article

The Effect of Public Debt on Private Investment in Tanzania

Author

Listed:
  • Mabula, Salyungu
  • Mutasa, Felician

Abstract

This study explores the effect of public debt on private investment in Tanzania. Secondary data for the period of 1970-2016 were collected from National Bureau of Statistics (Tanzania), Bank of Tanzania, World Bank, and scholarly journals. An Autoregressive Distributed Lag (ARDL) bound test to cointegration is used in this study. Results suggest a significant evidence of nonlinear long run and short run relationship between external debt and private investment. However, Granger causality test suggests that this relationship is rather a co-movement than causal. At 5% level of significance, there is no significant evidence of long run and short run relationship between domestic debt and debt service on one hand, and private investment on the other hand. However, the combined effect of domestic and external debt on private investment is statistically significant both in long run and short run. The study recommends the government to adopt strict policies on project implementations to ensure positive returns of borrowed funds and closely monitoring of public debt, particularly external debt on which private investment is more responsive than domestic debt and debt service, despite its sustainability at present.

Suggested Citation

  • Mabula, Salyungu & Mutasa, Felician, 2019. "The Effect of Public Debt on Private Investment in Tanzania," African Journal of Economic Review, African Journal of Economic Review, vol. 7(1), January.
    • Handle: RePEc:ags:afjecr:285002
    DOI: 10.22004/ag.econ.285002
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/285002/files/182553-465048-1-SM.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.285002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fisayo Fagbemi & Opeoluwa A. Adeosun, 2020. "Public Debt-Investment Nexus: the Significance of Investment-Generation Policy in West Africa," Research Africa Network Working Papers 20/083, Research Africa Network (RAN).
    2. Fisayo Fagbemi & Opeoluwa A. Adeosun, 2020. "Public Debt-Investment Nexus: the Significance of Investment-Generation Policy in West Africa," Working Papers of the African Governance and Development Institute. 20/083, African Governance and Development Institute..
    3. Dinci J. Penzin & Afees Salisu & Benedict N.Akanegbu, 2022. "A Note On Public Debt-Private Investment Nexus In Emerging Economies," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(1), pages 25-36, June.
    4. Fisayo Fagbemi & Opeoluwa A. Adeosun, 2020. "Public Debt-Investment Nexus: the Significance of Investment-Generation Policy in West Africa," Working Papers 20/083, European Xtramile Centre of African Studies (EXCAS).
    5. Ngasamiaku, Wilhelm M. & Ngong'ho, Sende, 2022. "Macroeconomic Determinants of Public Debt in Tanzania: Empirical Evidence and lessons for Post COVID-19 Recovery," African Journal of Economic Review, African Journal of Economic Review, vol. 10(5), December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:afjecr:285002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://www.ajol.info/index.php/ajer/index .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.