The Determinants of public debt in the Gambia
an autoregressive redistributed lag (ARDL) bound cointegration technique
With rising public debt levels in developing and middle income countries and the debt crises that has strucked most of the advanced economies, there has been a lot of scholarly and policy debates about the factors that determines the public debt level of a country. This paper examines the impact of selected macroeconomic variables as well as a governance indicator (government effectiveness variable) in determining the public debt level of The Gambia. An Autoregressive Distributed Lag (ARDL) method was employed to establish the short-run and long-run impact of the selected variables on public debt. The study reveals that trade openness and gross fixed capital formation have an increasing impact on public debt in the long-run. GDP growth, official exchange rate, and the government effectiveness variables on the other hand have a decreasing effect on public debt levels in the long-run. However, none of the variables show a significant relationship with public debt of levels of The Gambia in the short-run.
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