An investigation of the impact of fiscal policy on economic growth in Namibia
Loading...
Date
2025
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of Namibia
Abstract
This study analyzed the impact of fiscal policy on economic growth in Namibia, using
annual time series data from 1990 to 2022. The study employed the Autoregressive
Distributed Lag (ARDL) estimation technique to examine the long-run relationship
between fiscal policy variables and economic growth, along with the Granger causality
Wald test to investigate the direction of causality between government expenditure and
economic growth. The economic variables analyzed included real gross domestic product
(RGDP), government expenditure (GE), budget deficit (BD), trade openness (TOPEN),
and inflation (INF). The empirical findings revealed a significant positive impact of
government expenditure on economic growth in both the short and long run. While trade
openness had a positive long-run impact, it also showed a negative short-run effect on
economic growth. The budget deficit exhibited an insignificant negative long-run impact
on growth, and inflation was not found to be a strong determinant. Furthermore, the study
found no causal relationship between government expenditure and economic growth,
indicating the absence of Granger causality in either direction. Based on these findings, it
is recommended that the government focuses on enhancing the effectiveness of the
Medium-Term Fiscal Consolidation Strategy, which was initiated in 2017 by the Ministry
of Finance and Public Enterprises to address fiscal imbalances and rising public debt,
aiming to reduce the budget deficit, stabilize debt levels, and promote sustainable
economic growth
Description
A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Science in Economics
Keywords
Government expenditure, Inflation budget deficit, Economic growth, Namibia, ARDL, Long and short run, Granger causality