Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 315

Article in Press

EMPIRICAL ANALYSIS OF THE RICARDIAN EQUIVALENCE HYPOTHESIS IN SUB-SAHARA AFRICAN COUNTRIES: PANEL ARDL APPROACH

Robert Becker Pickson

  •  Received: 05 June 2018
  •  Accepted: 05 June 2018
The validity of the Ricardian equivalence proposition remains disputed in spite of the numerous empirical work done on it. This study utilised panel ARDL estimation approach to investigate the evidence of Ricardian Equivalence Hypothesis in five Sub-Sahara African countries, namely Botswana, Ghana, Gambia, Nigeria, and Kenya over the period 1981-2014. From the long-run results obtained from the Pooled Mean Group regression, GDP per capita and interest rate have significant positive impacts on private consumption, whereas government debt, government spending, government interest payment on the outstanding debt have deleterious effects on private consumption. In addition, the empirical findings strongly opposed the hypothesis of the Ricardian equivalence in Sub-Sahara African countries.

Keywords: Ricardian equivalence; private consumption; interest rate; government debt; government spending; government debt interest payments; inflation