Abstract
Purpose: The aim of the paper is to examine the existence or not of a long run or a short run relationship between public debt and economic in Niger and investigate the significance of this relationship. Approach/Methodology/Design: The study first applied time series econometrics tests such as Augmented Dickey-Fuller (ADF) unit root test, Bound cointegration test and Auto Regressive Distributed Lag (ARDL) on annual data obtained from the International monetary fund (IMF) and the West African States Central Bank (BCEAO). The observations cover the period from 1970 to 2019. The study then performed some residual tests including serial correlation, normality and heteroskedasticity for the accuracy of the prediction of the model. Findings: The empirical results showed no long run relationship between public debt and economic growth in Niger. The short run analysis revealed that public debt and budget balance have short run causal effects on economic growth in Niger. The coefficients are significant at 10% significance level. Practical Implications: This article gives valuable information to Niger policy makers regarding the effects of public debt on Niger economic growth. The article highlights the effects that public debt has on economic growth in Niger in the short and long run. Therefore helping policy makers decide whether to increase or reduce the borrowing trend. Originality/value: The results of the paper give valuable information on the relationship that public debt may have with economic growth in Sub Saharan African countries with the similar macroeconomic indicators with Niger.
Highlights
Located in the heart of the Sahel, Niger is a vast country with an economy that depends essentially on agriculture which represents 40% of its Gross domestic product (GDP)
Public debt in percentage of GDP, budget balance in percentage of GDP, Government consumption in percent of GDP and logarithm of the external debt service are respectively used as proxy for Public Debt (PD), Budget Balance (BB), Government Consumption (GC) and External Debt Service (EDS)
High correlations are found between economic growth and government consumption and between budget balance and external debt service with respectively the correlation coefficients of 0.687452 and -0.701044 indicating a strong relationship between economic growth and government consumption and between budget balance and external debt service
Summary
Located in the heart of the Sahel, Niger is a vast country with an economy that depends essentially on agriculture which represents 40% of its Gross domestic product (GDP). The economy of Niger has been marked in recent years by economic performances characterized by a growth of almost 5.2% in 2018 and a significant improvement in the business climate (World Bank, 2019). The country’s debt as percentage of Gross domestic product (GDP), continue to increase. In 2018 Niger's debt reached 45% of its GDP. This has led the the International monetary fund to warn Niger government on the increasing trend of Niger’s debt ratio (IMF, 2019).
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