The effect of public debt on private investments and economic growth in Kenya (1980-2013).
Kamundia, Susan .W.
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The Kenya vision 2030 aims at achieving a 10 percent per annum growth rate in the economy. Investments have been identified as a major channel through which this objective can be met. The government has undertaken various public investments to fuel economic growth. However, for this to be even more effective, private investments have to be taken into consideration. The government has taken various measures such as relying more on external debt to avoid crowding out private investments and consequently promote economic growth. Despite these efforts, private investments and economic growth have remained low. This study aims at finding out what the effect that public debt has on the level of investment and consequently on economic growth. The study will use time series data from 1980 to 2013. Autoregressive Distributed Lag modelling will be applied in the estimation of the model as it works with both I (0) and I (1) variables. Granger causality test will be used to determine the presence and direction of causality between public debt and economic growth.