Volume: 4 Issue 11 [November 2021]

Article:Effects of Public Debt on Economic Growth with nonlinearity in Sub-Saharan Africa: Case of the Countries of the West African Economic and Monetary Union

Author: Mamadou Aliou Diallo, Min Su, Ophelia Amankwah, Niyonzima Patrick

Volume: Vol 4, Issue 11; November 2021

DOI: North American Academic Research, 4(11) 205-220 November 2021, https://doi.org/10.5281/zenodo.5753317

Abstract: This article examines the impact of public debt on economy growth in the West African Economic Monetary Union (WAEMU) region from 2010 to 2019. It does so using data from a panel of eight WAEMU member countries. Using a Panel Smooth Transition Regression (PSTR) model developed by González et al., we establish a non-linear relationship between the influence of public debt on economic growth and the evolution of the debt relative to GDP (2005). The findings show that changes in debt levels have an effect on economic development in both positive and negative directions. The average threshold for this transition is 60.3 %. Our conclusions are substantiated by elements relating to the business environment and the institutional quality.

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