Fiscal Consolidation and Asymmetric Macroeconomic Effects: Evidence from Sub Saharan African Countries
| dc.contributor.author | Oluwasola E. Omoju | |
| dc.contributor.author | Ruth Badru | |
| dc.contributor.author | Andrea Cale | |
| dc.contributor.author | Ayobami E. Ilori | |
| dc.date.accessioned | 2026-01-29T09:10:17Z | |
| dc.date.available | 2026-01-29T09:10:17Z | |
| dc.date.issued | 2026 | |
| dc.description.abstract | This study investigates the macroeconomic implications of fiscal consolidation in Sub-Saharan Africa (SSA) using an annual dataset from 1995 to 2019 for 37 countries in the region. Employing the local projection approach, we analyze the short- and medium-term effects of fiscal consolidation on output and debt reduction. Our findings reveal that fiscal consolidation measures exert an expansionary effect on output, and the debt reduction effect reaches its peak after three years. Notably, heavily indebted poor countries exhibit a more pronounced response to fiscal consolidation, while the impact is independent of resource endowment levels. During economic upturns, the debt reduction effect is rapid but transitory. Conversely, during downturns, the effect is gradual, more substantial, and persistent. Furthermore, we find that expenditure-based and revenue-based consolidation have similar effects on debt and output during expansionary phases. However, during recessions, their effects differ considerably. Overall, our findings indicate that expenditure-based fiscal consolidation enhances fiscal sustainability but may come at the cost of reduced consumption welfare. Moreover, prioritizing expenditure-based fiscal consolidation offers a promising pathway for enhancing fiscal sustainability in the region. These findings offer important implications for policymakers seeking to address the challenges of public finance and debt distress in SSA. | |
| dc.identifier.uri | https://publication.aercafricalibrary.org/handle/123456789/4049 | |
| dc.publisher | AERC | |
| dc.title | Fiscal Consolidation and Asymmetric Macroeconomic Effects: Evidence from Sub Saharan African Countries |