Public debt and economic growth nexus in sub-saharan Africa: does institutional quality matter?

Abstract

This paper investigates the effect of institutional quality and public debt on economic growth among sub-Saharan African countries. The study employs the System Generalized Method of Moments (SGMM) and the Fixed Effect techniques on data from 35 Sub Saharan African countries (sourced from the World Development Indicators (WDI) and the World Governance Index (WGI) databases from 2010 to 2020). The results reveal that institutional quality has a significantly negative effect on public debt; public debt has a significantly negative effect on economic growth; and institutional quality has a significantly positive effect on economic growth. This suggests that countries with weak institutions may have debt overhang deleterious to economic growth.