The causality relationship between income inequality, debt, and economic growth in Sub-Saharan African countries1


Obiero W. L., TOPUZ S. G.

Journal of International Trade and Economic Development, 2023 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Publication Date: 2023
  • Doi Number: 10.1080/09638199.2023.2274854
  • Journal Name: Journal of International Trade and Economic Development
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Academic Search Premier, IBZ Online, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Geobase
  • Keywords: economic growth, Income inequality, panel bootstrap causality approach, public debt
  • Eskisehir Osmangazi University Affiliated: Yes

Abstract

This study aims to investigate the direction of causality between income inequality and growth, income inequality and debt, and debt and growth for 11 selected countries in SSA countries (Botswana, Ghana, Kenya, Lesotho, Malawi, Nigeria, Rwanda, South Africa, Tanzania, Uganda, and Zambia). The panel bootstrap causality approach is applied to these countries from 1980 to 2018. Inequality is represented using Gini coefficient, Palma ratio, and Theil index. The findings show that there is at least a one-way causal relationship between public debt and inequality in Botswana, Ghana, Kenya, Malawi, Nigeria, Rwanda, South Africa, Tanzania, and Uganda, between inequality and growth in Botswana, Lesotho, Nigeria, and South Africa and between growth and debt in Botswana, Rwanda, South Africa, and Uganda. Empirical results imply that the relations between the relevant variables in the Sub-Saharan African countries may vary according to the specific characteristics of these countries. To the best of our knowledge, this is the first paper to analyse the impact of these three macroeconomic variables together.