Budget Deficits, economic growth and external balances in SADC countries: a panel data and time series analysis
type: CreativeWork
description: The role fiscal policy plays as a macro-economic stabilisation tool remains a contentious issue in macro-economics. Yet an understanding of the role fiscal policy plays in influencing external balances as well as economic growth is instructive upon policy makers to craft stimulus packages in order to enhance sustainable economic growth, bearing in mind, as well, that lack of fiscal space underscores the limits of discretionary fiscal policy. In the same vain, an awareness of the role of budget deficits in driving external balances plays a principal role in adopting fiscal prudence as a way of harnessing the widening current account deficits which may have dire consequences on the economy. Notwithstanding the importance such an understanding is to the achievement of the Southern African Development Community (SADC)’s goals of fighting poverty and attaining economic integration through adoption of sound macroeconomic policies, the SADC region has received very little scholarly attention on this contemporary issue. This thesis fills this gap in the literature by providing empirical evidence that is SADC specific on the role of fiscal policy in driving the external balances as well as the impact of fiscal policy in accounting for economic growth in the region. This goal is achieved in three separate chapters; chapter4, chapter 5, and chapter 6 of this thesis. In chapter 4 of this thesis the study analysed the co-movement between budget deficits and the external balances in 14 SADC member countries. Relying on evidence from the cutting edge Common Correlated Mean Group Estimator (CCEMG) and the system general methods of moments (GMM) estimation approaches, the study found evidence in support of the twin deficits hypothesis in the case of the 14 SADC member countries included in our analysis. The implications of these findings underscore the need to adopt fiscal austerity measures in order to harness the widening current account deficits which are way beyond the SADC set …
abstract: The role fiscal policy plays as a macro-economic stabilisation tool remains a contentious issue in macro-economics. Yet an understanding of the role fiscal policy plays in influencing external balances as well as economic growth is instructive upon policy makers to craft stimulus packages in order to enhance sustainable economic growth, bearing in mind, as well, that lack of fiscal space underscores the limits of discretionary fiscal policy. In the same vain, an awareness of the role of budget deficits in driving external balances plays a principal role in adopting fiscal prudence as a way of harnessing the widening current account deficits which may have dire consequences on the economy. Notwithstanding the importance such an understanding is to the achievement of the Southern African Development Community (SADC)’s goals of fighting poverty and attaining economic integration through adoption of sound macroeconomic policies, the SADC region has received very little scholarly attention on this contemporary issue. This thesis fills this gap in the literature by providing empirical evidence that is SADC specific on the role of fiscal policy in driving the external balances as well as the impact of fiscal policy in accounting for economic growth in the region. This goal is achieved in three separate chapters; chapter4, chapter 5, and chapter 6 of this thesis. In chapter 4 of this thesis the study analysed the co-movement between budget deficits and the external balances in 14 SADC member countries. Relying on evidence from the cutting edge Common Correlated Mean Group Estimator (CCEMG) and the system general methods of moments (GMM) estimation approaches, the study found evidence in support of the twin deficits hypothesis in the case of the 14 SADC member countries included in our analysis. The implications of these findings underscore the need to adopt fiscal austerity measures in order to harness the widening current account deficits which are way beyond the SADC set …
author: Mavodyo, Elisha
keywords: fiscal policy --economic growth --poverty alleviation --macroeconomic policies --SADC
license: https://devspace.unizulu.ac.za/bitstreams/60dac9a1-2fb5-4ae9-91ea-4537b475ffcb/download
date published: 2017
date modified: 2026-07-24T06:16:53Z
provider: University of Zululand
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: University of Zululand