Research Articles (Economics and Finance)
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Browsing Research Articles (Economics and Finance) by Subject "De facto fiscal space"
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Item Open Access Fiscal space, governance quality and inclusive growth: evidence from Africa(Emerald, 2023) Katuka, Blessing; Mudzingiri, Calvin; Ozili, Peterson K.š£ššæš½š¼šš² This study aims to examine the impact of fiscal space and governance quality on inclusive growth in African countries. šš²šš¶š“š»/šŗš²ššµš¼š±š¼š¹š¼š“š/š®š½š½šæš¼š®š°šµ In total, 28 African countries were analyzed from 2000 to 2020 using the generalized method of moment regression method. An inclusive growth index was developed using the principal component analysis (PCA) method. The PCA-derived index incorporates factors such as poverty, income inequality, economic participation and per capita income. šš¶š»š±š¶š»š“š The main findings suggest that fiscal space availability (de facto fiscal space and fiscal balance) promotes inclusive growth. The study also showed that lagged inclusive growth, digitalization and governance indicators positively influence inclusive growth. The study concludes that fiscal space availability fosters inclusive growth, but this effect is mediated by governance quality in Africa. š¢šæš¶š“š¶š»š®š¹š¶šš/šš®š¹šš² Several studies examined the role of fiscal policy on inclusive growth. However, it is crucial to assess the fiscal space, that is, the financial capacity of the government to implement its fiscal policy without harming its financial stability. This paper, therefore, contributes to the existing literature by using de facto fiscal space indicator to comprehend fiscal dynamics contributing to inclusive growth. In addition, the paper uniquely constructs an inclusive growth index by including poverty severity, which considers both the incidence and depth of poverty and inequality in society.Item Open Access Impact of output gap, COVID-19, and governance quality on fiscal space in Sub-Saharan Africa(MDPI, 2023) Katuka, Blessing; Mudzingiri, CalvinThis study examined the determinants of fiscal space within the Sub-Saharan Africa (SSA) region, utilising a panel of 33 countries from 2005 to 2021. The paper applied the panel threshold, difference, and system generalised method of moments (GMM) regression techniques. The empirical results found evidence of constrained fiscal space and poor governance in Central, Western, and Eastern Africa. The results further unveiled that an enhancement in governance indicators beyond ā0.23 for the governance index, ā0.15 for control of corruption, ā0.98 for the rule of law, ā0.37 for regulatory quality, ā0.15 for voice and accountability, +0.36 for political stability, and ā0.61 for government effectiveness, respectively, increase fiscal space. Moreover, the study concluded that the output gap, COVID-19, trade openness, and economic growth impact fiscal space availability in Central, Western, Southern, and Eastern Africa. The paper investigated whether the COVID-19 pandemic and governance quality significantly influenced fiscal space within SSA. We strongly recommend enhancement in all facets of governance through comprehensive restructuring of governance policies across all SSA countries. Another key recommendation is fostering trade openness to expand tax revenue generation and broaden the tax base, thereby providing the continent with greater fiscal space and improved resilience to unforeseen shocks.