Nahabwe Patrick Kagambo John, Kagarura Willy Rwamparagi, Munyambonera Ezra
Kabale University, Kabale, Uganda
Abstract
This study investigates the relationship between government spending and trade balance in Sub-Saharan Africa from 2005 to 2022 using an autoregressive distributed lags (ARDL) model and balanced World Bank panel data. The findings reveal a significant short- and long-term association between the variables. A 10% rise in government spending results in a 6.3% short-term trade balance decline but a 30.9% improvement in the long run, illustrating a J-curve effect. Cointegration and Granger causality tests confirm a stable, causal relationship. The study recommends strategic spending policies to mitigate short-term deficits and boost long-term trade performance.
Keywords: Government expenditure, Trade Balance, Sub-Saharan Africa
Journal Name :
EPRA International Journal of Economic Growth and Environmental Issues (EGEI)

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Published on : 2025-01-10

Vol : 13
Issue : 1
Month : January
Year : 2025
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