TITLE:
Effects of Public Debt on Economic Growth: An Empirical Evidence from Zambia (2011-2021)
AUTHORS:
Chama Kabemba, Martin Kabwe
KEYWORDS:
Economic Growth, Exchange Rate, External Debt Stock and Domestic Debt Stock
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.14 No.2,
February
21,
2024
ABSTRACT: Understanding the effect of public debt on economic
growth in a country is vital for macroeconomic strategy groundwork and analysis
as well as maintaining monetary policies that activate progress and growth. The
purpose of this study was to analyse the effects of public debt on economic
growth in Zambia from 2011-2021. The
researcher employed Microsoft Excel and E-Views to analyse data. The
Autoregressive distributed lags model (ARDL) estimates are assumed to be relevant in the long-run, and can be used to explain a
long-run correlation between variables. It is especially useful for describing the dynamic behaviour of economic time series and forecasting. The study
estimated the ARDL comprising Prime Lending Rate, Exchange Rate, External Debt Stock
and Domestic Debt Stock as well as the dependent variable Real Gross Domestic Product. The variables incorporated
in the econometric model were; Prime Lending Rate, Exchange rate,
External Debt Stock and Domestic Debt Stock. The results from the econometric
model revealed that these factors have had a significant impact on economic
growth in Zambia from 2011-2021. The results of this study imply that policy
makers should ensure that Zambia borrows for production and not for
consumption. Borrowing for production would increase Gross Domestic Product
(GPD) and consequently real GDP. Thus, the
debt would have a positive impact on the economy. There is need for Policy
makers to earnestly embark on coming up with a consistent macro-economic
database to back more research essential to offer policy guidance.