Public Sector Economics

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    PUBLIC DEBT SUSTAINABILITY: ESTIMATING THE FISCAL REACTION FUNCTION FOR UGANDA (1981/82 – 2016/17)
    (Makerere University, 2019-11-12) BULIME, NSUBUGA ENOCK WILL
    This study examines the sustainability of Uganda’s public debt from 1981/82 to 2016/17. The study uses the fiscal reaction function approach to find out whether the government’s reaction to the growing debt is responsive and systematic. The study uses annual secondary time series data obtained from the Ministry of Finance, Planning and Economic Development, the Bank of Uganda and the World Bank Database for World Development Indicators of 2018. The autoregressive distributed lag estimation approach is used based on the order of integration of the study variables and the presence of a long run relationship. The results show that, in the long run, the government has been able to respond to past debt build-up in a sustainable way by increasing the primary balance. However, in the short run, the government has not been responsive to the debt bulge which poses risks to debt sustainability. The study suggests that in order to guarantee future debt sustainability, the government should strengthen the primary balance by reducing wasteful expenditures through eliminating corruption, reducing fiscal slippages and supplementary budgets and curbing the creation of more administrative units which increase the funding burden of the government.
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    GOVERNMENT CAPITAL EXPENDITURE, RECURRENT EXPENDITURE AND ECONOMIC GROWTH IN GHANA
    (University of Cape Coast, 2017-06-10) ASOMANI, ABEL NYARKO
    This study sought to find out the relationship between government expenditure and economic growth in a further disaggregated level in Ghana. Focusing on the period 1990 to 2015, it considered the major sub-components of recurrent expenditure (thus non-interest and interest-payment) and capital expenditure and their relationship with economic growth. Using a quarterlized time series data, this work employed the Autoregressive Distributed Lag model (ARDL) to estimate the relationship among these variables of interest. Furthermore, to establish the direction of causality that lies between these government expenditures and economic growth, this study resorted to the Granger Causality test to arrive at the direction of causality among the variables. Based on the ARDL results, capital expenditure and non-interest recurrent expenditure promotes economic growth in the long-run period while interestpayments retards economic growth in the all periods. The short-run results show that capital expenditure and non-interest recurrent expenditure increases economic growth while the lagged values for capital expenditure decreases economic growth. The granger causality test indicates a unidirectional causality running from the government expenditures to economic growth, except for that of interest payment whereby causality runs from Economic growth to interest-payment expenditure. Based on the findings, these recommendations were suggested to the Ministry of Finance: increase funding for capital expenditure, increase and intensify the monitoring aspect of non-interest expenditure and capping of the levels of public borrowings within a year to decrease interest-payment burden.
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    DYNAMIC PANEL DATA ANALYSIS OF THE IMPACT OF PUBLIC SECTOR INVESTMENT ON PRIVATE SECTOR INVESTMENT GROWTH IN SUB-SAHARAN AFRICA
    (University Of Bostwana, 2018-11-12) BOIKANYO, PHEMELO
    The present sought to analyze the impact of public sector investment on private sector investment in Sub-Saharan Africa. The study utilized panel data from 2005-2015 across forty-five SubSaharan African economies. To estimate the results, the study employed the Two-Step System GMM model as developed by (Arelano & Bover, 1995). In the presence of endogeneity, GMM is one of the robust estimation techniques that produces unbiased, efficient, and consistent estimators. For the validity of the instruments and presence of second-order serial correlation, the study used the Difference-in-Hansen and the Arrellano-Bond specification tests, respectively. The results from the study reflect that public sector investment negatively and significantly impacts private sector investment in Sub-Saharan Africa. Therefore, public sector investment crowds-out private sector investment. To account for the heterogeneous nature of countries in the region, the study conducted a sub-sample analysis by dividing the sample into low-income countries and lowerincome and upper-middle income economies. Results from the sub-sample analysis showed that public sector investment bore no significant effect on private sector investment in low-income countries sample. As regards lower-income and upper-middle income economies, public sector investment crowds-out private sector investment. To minimize the crowding-out effects of public sector investment on private sector investment, the study recommends four policy interventions: proliferation and mobilization of domestic resources; inclusive models of public sector investment; strengthening of public sector financial managements systems, and regional integration of public infrastructure development.
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    COMPLIANCE BURDEN AND TAX GAP AMONG MICRO AND SMALL SIZE BUSINESSES IN GHANA
    (UNIVERSITY OF CAPE COAST, 2021-03-02) AVORKPO, ERIC ATSU
    Developing an efficient and effective tax policy is not a guarantee for reducing revenue loss but a concerted effort of the taxpayers and the revenue mobilization agency to ensure high level of compliance without having to increase the cost of collecting these revenues and without imposing much compliance burden on the taxpayer. This study investigates the compliance burden and tax gap of Micro and Small Enterprises (MSEs) in Ghana. It specifically focuses on how compliance burden affects the tax gap (Revenue loss) as well as the correlates of compliance burden. Data on 485 registered MSEs taxpayers collected by the Directorate of Research Innovation and Consultancy (DRIC) was used for the study. A t-test was conducted whiles OLS was employed to examine the effect of compliance burden on the tax gap as well as the correlates of compliance burden. It was found that small enterprises underpay tax while micro enterprises overpay tax. The compliance burden significantly increases the tax gap. Tax audit, number of taxes, tax knowledge, distance to the tax office, and the kind of service used in preparing and filing returns were found to have significant effects on compliance burden in Ghana. The key policy recommendation is that Ghana Revenue Authority (GRA) should intensify its tax auditing work to reduce the compliance burden and build more offices to reduce the distance covered by MSEs when visiting the tax office to make tax payment or seek advice.
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    DETERMINANTS OF TAX REVENUE MOBILISATION IN LESOTHO
    (UNIVERSITY OF BOSTWANA, 2020-12-11) Jabari, Refiloe
    The study's objective is to examine the determinants of total tax revenue, VAT and IPCG taxes. Another aim is to investigate the effects of the Lesotho Revenue Authority (LRA) on these tax revenue categories. The empirical results are estimated using the autoregressive distributed lag (ARDL) estimation technique using the data for the period 1982 to 2017. The results show that the establishment of the Lesotho Revenue Authority has a significant positive effect on tax revenue and its categories, that the total tax is positively affected by per capita GDP, agricultural and services sectors, and remittance inflows. In contrast, official development assistance (ODA) negatively determines tax revenue. When analyzing the determinants of direct taxes represented by IPCG taxes, it is found that only per capita GDP has a positive effect in the long run. Remittances and ODA have a negative long-run effect. In the short run, LRA and GDP per capita have a significant positive effect on IPCG tax revenue. The VAT model findings show that services hinder the VAT revenue while agriculture and ODA boost it in the long run. The short-run dynamics reveal that VAT revenue is affected positively by the share of agricultural value-added and negatively affected by the share of services value-added and remittances. Policies improving agricultural sector and enhancing economic growth are recommended because these variables have the potential to broaden the tax base in Lesotho