Energy industry influence on Public Debt and GDP Growth

Problems with economic growth in South Africa and Nigeria

Public liability is negatively correlated to economic evolution and parade from a given level of commitment. High levels of civic obligation are corresponding with condensed rates of pecuniary progress and mounting levels of price rises. Disproportionate liability and weak size of return of outlay are a vicious cycle that tends to deteriorate the situation. Public debt is an issue of primary concern related to the inability of countries to self-finance their economies (Stolper, 1963). The situation of imbalanced budget and increasing financial responsibilities to third parties has involuntary these countries to incessantly search for models and strategy actions that might lead to stable fiscal growth within a dependable inflationary tendency. Therefore, this study is an econometric analysis of the effect of energy on public debt and GDP growth, with specific evidence from South Africa and Nigeria. This is because the two countries depend largely on energy for the purposes of servicing their public debt and spurring economic growth.

The study will utilize structural vector autoregression in the examination of three major research questions related to this phenomenon in trying to establish the truth. The research questions that would guide the study are as follows: (1) What is the asymmetric impact of energy income shocks on the expenditure by the governments and economic growth? (2) What is the asymmetric impact of energy income shocks on the expenditure by the governments and economic growth (in disaggregation by the classifications), and lastly, (3) What is the impact of the shocks of the government expenditure on the economic development (in disaggregation by the clasifications).

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REFERENCES.

Stolper, W.F. (1963). Economic Development in Nigeria. The Journal of Economic History, 23(04), 391-413.