The Analysis Of Behavior Of Private Investment In Response To Fiscal Policy Changes In Sub - Saharan Africa.

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Despite the belief that fiscal policy can influence both economic growth and privaterninvestment. , attempts like the stmctural Adjustment Program and Poverty ReductionrnStrategic Papers have not yet brought those much promising results in Sub- Saharan Africa.rnif so, can policy makers help enhance the performance of private investment in the regionrnthrough fiscal policy changes? In an attempt to answer this question, annual panel data forrnthe period 1986- 2003 for twenty three countries in the region was utilized. The data setrndepicted the persistence of heterogeneity among the countries. The fixed effects model wasrnapplied based on the specification tests. The regression output indicated that privaterninvestment is positively responsive to previous period fiscal policy measures, per capitarnGDP and its growth rate. However, current period fiscal policy measures, domestic creditrnto the private sector, real exchange rate, inflation, and the size of government control in thernexchange rate market appeared insignificant in affecting private investment in the region.rndebt servicing significantly and negatively discouraged private investment, while debtrnstock was not found doing so. The conclusion is that previous period policy measures arernmore influential in promoting private investment in sub-Saharan Africa. A high debtrnservicing reduces resource availability for domestic investment immediately than hugernexternal debt stock, whose repayment may be cancelled, at least based on conditions, asrnobserved in HIPes case.

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The Analysis Of Behavior Of Private Investment In Response To Fiscal Policy Changes In Sub - Saharan Africa.

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