Does public debt spur or hinder economic growth in Zambia?

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2018

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University Of Cape Town

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This study investigates the relationship between public debts and economic growth in Zambia using ARDL analysis covering the period from 1970 to 2015. The results confirm the existence of the long run relationship between public debt and economic growth but the relationship is found to be negative and insignificant both in the short and long run. In addition, the results indicate that both the debt overhang and crowding out effects occur in Zambia. The study recommends that the government should develop a debt management policy, improve macroeconomic management, borrow prudently, improve project appraisal and selection, investing in productivity-enhancing projects, encourage diversification and promote export-growth.
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