Francis Kwaw Andoh, Emmanuel Attobrah, Alexander Opoku, Mark Kojo Armah and Isaac Dasmani
The question of what level of public debt can increase inequality has become crucial in Africa. In this study, the authors examine the effect of public debt on inequality in…
Abstract
Purpose
The question of what level of public debt can increase inequality has become crucial in Africa. In this study, the authors examine the effect of public debt on inequality in Africa and estimate the debt-inequality threshold. The authors then examine the moderating role of tax burdens and corruption in the relationship between public debt and inequality.
Design/methodology/approach
Using data from the period 2005 to 2019 in 38 African countries, the generalized method of moment and the dynamic panel threshold regression techniques were employed to achieve the purpose of the study.
Findings
The results reveal that a 1% increase in public debt leads to a rise in inequality by about 0.17%. However, the effects doubles when the public debt ratio hits 57.47%. Tax burden worses the effect of public debt by about 2.9 percentage points, while control of corruption reduces debt effect on inequality by 61 percentage points.
Research limitations/implications
Owing to data availability, the study period was restricted to 2005 to 2019. Moreover, the study could not consider the disagreggation of inequality into different income groups due to pausty of data. While this could narrow the scope of the study, the results provide an important insight for policy makers.
Originality/value
This contributes to the scant literature on the effect of public debt on income inequality in African countries. This study is a novelty because its provides the level of public debt which worsens inequality in Africa, as well as the moderating effects of tax burden and corruption control.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2022-0581
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Keywords
Michael Insaidoo, Lilian Arthur, Samuel Amoako and Francis Kwaw Andoh
The purpose of this study is to assess the extent to which the Ghana stock market performance has been impacted by the novel COVID-19 pandemic.
Abstract
Purpose
The purpose of this study is to assess the extent to which the Ghana stock market performance has been impacted by the novel COVID-19 pandemic.
Design/methodology/approach
The study used the exponential generalized autoregressive conditional heteroscedasticity (EGARCH) model, by using daily time series data from 2 January 2015 to 13 October 2020. Both pre-estimation (Augmented Dickey-Fuller and Phillips-Perron) and post-estimation tests (Jarque-Bera) were conducted to validate the results.
Findings
While the study shows a statistically insignificant negative relationship between the COVID-19 pandemic and the Ghana stock returns, the results confirm that the COVID-19 pandemic has occasioned an increase in the Ghana stock returns volatility by 8.23%. Furthermore, the study confirmed the presence of volatility clustering and asymmetric effect, with the latter implying that worthy news tends to affect volatility more than unwelcome news of equal size.
Practical implications
To dampen uncertainties that trigger stock market volatility, the government should surgically target worse affected COVID-19 pandemic businesses and households to check the drop in profits and demand. Rigidities associated with stock market operations must be addressed to make it attractive to investors even in the midst of a pandemic.
Originality/value
This paper is a pioneer attempt at assessing the extent to which a developing economy stock market has been impacted by the novel COVID-19 pandemic using the EGARCH model.