An analysis of the impact of the public debt on economic growth of Namibia
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Date
2018
Authors
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Publisher
University of Namibia
Abstract
This paper examined the impact of public debt on economic growth of Namibia for the
period 2003 to 2016 using quarterly time series data on GDP growth as a proxy for
economic growth; external debt and domestic debt. Time series properties were tested
for stationarity using the Augmented Dickey-Fuller test. Johannsen Cointegration test
found no long run relationship among the variables under study. The study employed
Toda-Yamamoto Granger causality tests following a VAR framework and results
revealed a no causal relationship between public debt and GDP growth. The variance
decomposition analysis shows that domestic debt exerts more pressure on GDP growth in Namibia. The findings of impulse response function show that the response of GDP growth to public debt was unstable. The study recommend that instead of borrowing, policy makers should develop and implement strategies that increase revenue for the government to fill the deficit gap. Government should only consider borrowing for very high. priority projects that are well appraised and self-sustained that can contribute to economic growth, generating enough returns to upset the debt servicing. Lastly, effective and efficient utilization of public resources is needed to ensure that the future generation's welfare or economic production is not being mortgaged in continuous indebtedness.
Description
A thesis submitted in partial fulfilmemt of the requirements for the Degree of Master of Science in Economics
Keywords
Namibia public debt, Economic growth