An analysis of the nexus between public debt and private investment: Evidence from Namibia
| dc.contributor.author | Ngwena, Ester Ndapandula N. | |
| dc.date.accessioned | 2024-05-13T09:22:44Z | |
| dc.date.available | 2024-05-13T09:22:44Z | |
| dc.date.issued | 2022 | |
| dc.description | A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Science in Economics | |
| dc.description.abstract | Public debt in Namibia has been rising over the years and the question is whether the persistently high debt level can negatively affect private gross fixed capital formation or not. Applying the Autoregressive Distributed Lag (ARDL) model for cointegration on data for the period 2010Q1 to 2019Q4, this study empirically examined the nexus between public debt and private gross fixed capital formation in Namibia. The ARDL test results revealed the existence of a long-run relationship between the variables. Domestic debt and interest rate were found to have a statistically significant negative effect on private gross fixed capital formation in the long-run. These findings are consistent with the Classical and Neoclassical Views, which state that domestic debt crowds-out private investment. Moreover, the Granger Causality test was employed as a confirmatory test to determine the direction of causality between public debt and private gross fixed capital formation. The Granger Causality test results show the presence of no causality between public debt and private investment in Namibia. A bi-directional relationship was, however, found to exist between interest rate and private gross fixed capital formation. Moreover, a statistically significant bi-directional causal relation was also discovered between gross domestic product and gross fixed capital formation. Policy implications from these findings are that proper debt management to support private gross fixed capital formation in Namibia is fundamental. Furthermore, the newly established revenue agency could create new avenues to raise funds to widen the revenue base. Finally, the government could moderately increase external borrowing, albeit with caution, as external debt can be susceptible to external shocks, which affect debt service cost | |
| dc.identifier.uri | http://hdl.handle.net/11070/3816 | |
| dc.language.iso | en | |
| dc.publisher | University of Namibia | |
| dc.subject | Nexus | |
| dc.subject | Public debt | |
| dc.subject | Private investment | |
| dc.subject | Namibia | |
| dc.subject | University of Namibia | |
| dc.title | An analysis of the nexus between public debt and private investment: Evidence from Namibia | |
| dc.type | Thesis |