Browsing by Author "Astaraki Animut"

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    The Impact of External Debt, Unemployment, and Inflation on Economic Growth: Evidence from Sub-Saharan African Countries
    (A.A.U, 2022-06-08) Astaraki Animut; Helen Berga (PhD)
    Achieving a high rate of economic growth, full employment, and price stability is key to macroeconomic policy objectives and a top priority for all countries worldwide. As a result, if these fundamental macroeconomic policy goals are to be realized, understanding the influence of external debt, unemployment, and inflation on economic growth is crucial. This study aims to examine the impact of external debt, unemployment, and inflation on economic growth in Sub-Saharan African countries. The study used panel data from thirty Sub-Saharan African countries from 2005 to 2019. The data were processed using STATA 15 software for the windows econometrics package. The researcher employed a dynamic panel regression model, the system generalized method of moments (system GMM) estimation strategy, and the Granger causality test. The study found that the three primary factors, external debt, unemployment, and inflation, have a significant negative relationship with economic growth in Sub-Saharan Africa. As external debt, unemployment, and inflation increased, all three variables had a detrimental influence on growth. Our results indicate that foreign debt, as a result of debt servicing, has a detrimental influence on growth by crowding out both private and governmental investment. This supports the debt-overhang hypothesis' applicability in the SSA African region. According to the findings, economic growth had no causal relationship with inflation, but it had a one-way causal relationship with unemployment and external debt which flowed from unemployment to economic growth and from economic growth to external debt.