TITLE:
Debt and Growth in West African Economic and Monetary Union Countries (WAEMU): The Role of Institutional Quality
AUTHORS:
Kacou Firmin Croi, Adama Diaw
KEYWORDS:
Debt, Institutions, Economic Growth, Threshold
JOURNAL NAME:
Modern Economy,
Vol.11 No.9,
September
21,
2020
ABSTRACT: This paper examines the role of institutional
quality in the relationship between debt and growth in the West African
Economic and Monetary Union (WAEMU) over the period 1980-2019. We used a
combination of models. The model of Hansen (1999) and the models of Brambor et
al., (2006) and that of Esarey & Sumner (2018). The results of the direct
relationship between debt and growth indicate a debt threshold of 54.50% of
GDP. The results also show that, below this threshold, debt has a positive
effect on growth, but, above that threshold, the effect is negative. The
results also show that taking into account the quality of institutions in the
relationship between debt and growth has a positive and significant net effect
on growth. This result highlights the
important and essential role of the quality of institutions in debt management.