IDEAS home Printed from https://ideas.repec.org/a/ipf/psejou/v49y2025i1p129-152.html
   My bibliography  Save this article

Fiscal policy burden accruing from public debt accumulation: theoretical effect on growth and empirical evidence

Author

Listed:
  • Samson Edo

    (Department of Economics, University of Benin, Benin City, Nigeria)

  • Osaro Oigiangbe

    (Department of Economics, University of Benin, Benin City, Nigeria)

Abstract

The study investigates how fiscal policy burden accruing from public debt affects economic growth in Sub-Saharan African countries over the period 1990-2022. It employs the generalized method of moments and auto-regressive distributed lag methodologies, which reveal that fiscal policy burden significantly impaired economic growth during the period. The results, therefore, support the view that the growth benefits of fiscal policy are constrained by large accumulations of public debt, validating the concern raised by multilateral institutions about the economic consequences of large and excessive debt accumulation. Furthermore, the results corroborate the Classical theory prediction of stagnation in long-run growth when existing public debt is too large for fiscal policy to accommodate. Therefore, interventions are required to contain the fiscal policy burden, in order to foster economic growth. Such policy interventions should aim at reducing the level of public debt and increasing the fiscal revenue from non-tax sources.

Suggested Citation

  • Samson Edo & Osaro Oigiangbe, 2025. "Fiscal policy burden accruing from public debt accumulation: theoretical effect on growth and empirical evidence," Public Sector Economics, Institute of Public Finance, vol. 49(1), pages 129-152.
    • Handle: RePEc:ipf:psejou:v:49:y:2025:i:1:p:129-152
    DOI: 10.3326/pse.49.1.5
    as

    Download full text from publisher

    File URL: http://pse-journal.hr/upload/files/pse/2025/1/Fiscal_policy_burden_accruing_from_public_debt_accumulation___theoretical_effect_on_growth_and_empirical_evidence.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.3326/pse.49.1.5?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
    ---><---

    More about this item

    Keywords

    fiscal policy; public debt; economic growth; developing countries;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

    Statistics

    Access and download statistics

    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:ipf:psejou:v:49:y:2025:i:1:p:129-152. 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: Martina Fabris (email available below). General contact details of provider: https://edirc.repec.org/data/ijfffhr.html .

    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.