Fiscal Policy and Economic Growth: An Examination of Selected Countries in Sub-Saharan Africa

Abstract

The debate on the effectiveness of fiscal policy as a tool for promoting growth and development remains inconclusive given the positions of economic theories as well as conflicting results of past studies. This study sought to determine the effect of fiscal policy variables on the economic growth of sub-Saharan African countries. The ex-post facto research design was adopted which enabled the study to make use of secondary data from sub-Saharan African Countries in a panel least squares. The result of the linearly modelled hypotheses tested using the panel data estimation technique under the fixed-effect assumptions revealed that Government productive and unproductive expenditures, distortionary tax (a proportional tax on output at rate) and non-distortionary taxes have significant effects on the economic growth of sub-Saharan African countries. Findings also revealed that budget balances of sub-Saharan African countries have a positive but insignificant effect on the economic growth of sub-Saharan African countries.