Home           Contact us           FAQs           
     Journal Home     |     Aim & Scope    |    Author(s) Information      |     Editorial Board     |     MSP Download Statistics
2013 (Vol. 5, Issue: 1)
Article Information:

Domestic Debt and Economic Growth Nexus in Kenya

Godfrey K. Putunoi and Cyrus M. Mutuku
Corresponding Author:  Godfrey K. Putunoi 

Key words:  Economic growth, debt management, public domestic debt, size of government, , ,
Vol. 5 , (1): 1-10
Submitted Accepted Published
July 24, 2012 September 08, 2012 March 20, 2013

Literature is scanty on the relationship between domestic debt and economic growth with most researchers focusing on external debt. However, the shift in the composition of overall public debt in favour of domestic debt in sub-Saharan Africa countries has brought to the fore the need for governments to formulate and implement prudent domestic debt management strategies to mitigate the effects of the rising debt levels. This study investigates the effects of domestic debt on economic growth in Kenya. The issue is examined empirically using advanced econometric technique and quarterly time series data spanning 2000 to 2010. The Jacque Bera (JB) and Augmented Dickey-Fuller (ADF) tests have been used preliminarily in investigating the properties of the macroeconomic time series in the aspect of normality and unit roots respectively. The long run relationship between the variables was investigated using the Engel-Granger residual based and Johannes VAR based cointegration tests. There is evidence of cointegration hence an error correction model has been used to capture short run dynamics. The study shows that domestic debt expansion in Kenya, for the period of study, has a positive and significant effect on economic growth. In view of this, the study recommends that the Kenyan government should encourage sustainable domestic borrowing provided the funds are utilized in productive economic avenues.
Abstract PDF HTML
  Cite this Reference:
Godfrey K. Putunoi and Cyrus M. Mutuku, 2013. Domestic Debt and Economic Growth Nexus in Kenya.  Current Research Journal of Economic Theory, 5(1): 1-10.
    Advertise with us
ISSN (Online):  2042-485X
ISSN (Print):   2042-4841
Submit Manuscript
   Current Information
   Sales & Services
Home  |  Contact us  |  About us  |  Privacy Policy
Copyright © 2015. MAXWELL Scientific Publication Corp., All rights reserved