Fiscal Policy And Current Asset In Sub Saharan Africa (1980 – 2015)

Temidaya O. Akinbobola Akinlo, Taiwo

 

Abstract

This study examined the impact of fiscal policy on current account in sub-Saharan Africa for the period of 1980-2015. The study used pooled OLS, Fixed effect and Dynamic GMM techniques for the analysis. We examine the relationship between fiscal policy and current account in 21 sub-Saharan African countries. We also examine the impact of fiscal policy on current account in 9 oil producing countries and 11 non-oil producing countries in sub-Saharan Africa to see if the fiscal policy will exact different impact on current account due to the effect of oil price volatility on oil producing countries. In the full sample and non-oil producing countries, the results show that fiscal policy proxy by government consumption has negative and significant impact on current account.  In the oil producing countries, the results show that an increase in government consumption could not exalt significant impact on current account due to the saving of proceed of oil boom and reinvest it in abroad. In all the estimations both in the full sample, non-oil and oil producing countries the results show that increase in investment and interest rate worsen the situation of the current account. while increase in GDP growth improve current account significantly.

Keywords: current account, fiscal policy, sub-Saharan Africa, panel data, Dynamic GMM

 

Fiscal Policy And Current Asset In Sub Saharan Africa (1980 – 2015)