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Determinants of fiscal effort in sub-Saharan African countries: Does conflict matter?

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  • Okwoche Princewill U.

    (University of Cape Town, South Africa, School of Economics Building, Middle Campus, Rondebosch 7701)

  • Iheonu Chimere O.

    (Centre for the Study of the Economies of Africa, Abuja, Nigeria)

Abstract

This study investigates the determinants of fiscal effort in sub-Saharan African (SSA) within the framework of fiscal reaction functions. Whereas previous studies focusing on SSA have mainly considered the economic non-debt determinants this study accounts for the role of conflict given its persistence in many SSA countries. It employs a variety of panel econometric methods that are applicable in tackling the problem of endogeneity. Specifically the study employs the instrumental variables fixed effects, the two-step generalised method of moments (GMM) and the traditional two-stage least squares techniques. Mainly the evidence shows that although SSA governments have made fiscal adjustments in response to the escalating levels of debt, conflict impacts negatively on this response in SSA. Furthermore, the results affirm the presence of fiscal fatigue in SSA’s fiscal reaction function. Recommendations based on these findings are discussed.

Suggested Citation

  • Okwoche Princewill U. & Iheonu Chimere O., 2021. "Determinants of fiscal effort in sub-Saharan African countries: Does conflict matter?," Economics and Business Review, Sciendo, vol. 7(2), pages 50-73, June.
    • Handle: RePEc:vrs:ecobur:v:7:y:2021:i:2:p:50-73:n:2
    DOI: 10.18559/ebr.2021.2.5
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    References listed on IDEAS

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    More about this item

    Keywords

    fiscal reaction functions; conflict; sub-Saharan Africa;
    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
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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