Public Policies and Private Savings and Investment in Sub-Saharan Africa: An Empirical Investigation

By Dhaneshwar Ghura, Michael T. Hadjimichael

February 1, 1995

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Dhaneshwar Ghura, and Michael T. Hadjimichael Public Policies and Private Savings and Investment in Sub-Saharan Africa: An Empirical Investigation, (USA: International Monetary Fund, 1995) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper assesses empirically the role of public policies in stimulating private savings and investment in sub-Saharan African countries, based on data for the period 1986-92. The main findings of the analysis are as follows: (i) policies effective in stimulating private savings and investment include those that keep the rate of inflation low, reduce macroeconomic uncertainty, promote financial deepening, and lower the external debt burden; (ii) measures that promote structural reforms and reduce the budget deficit (without lowering government investment) help to raise private investment; and (iii) declines in government savings are only partially offset by increases in private savings.

Subject: Foreign exchange, Government debt management, Income, National accounts, Private investment, Private savings, Public financial management (PFM), Real effective exchange rates

Keywords: Africa, Age dependency ratio, Broad money, Dependency ratio, GDP ratio, Government debt management, Government investment, Government investment expenditure, Government investment ratio, Government savings, Income, Investment decision, Investment expenditure, Investment model, Investment ratio, Private investment, Private savings, Rate of inflation, Real effective exchange rates, Sub-Saharan Africa, Substitution effect, WP

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1995/019
Stock No:

WPIEA0191995
ISBN:

9781451922523
ISSN:

1018-5941

Notes

Based on data for the period 1986-92.

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