Fiscal Policy and Poverty Reduction in Some Selected Sub-Saharan Africa Countries

Document Type: Research Paper

Authors

1 Department of Economics, Olabisi Onabanjo University Ago Lwoye Nigeria

2 Department of Economics, Olabisi Onabanjo University, Ago iwoye, Nigeria

3 Department of Economics, Faculty of Social Sciences, Olabisi Onabanjo University, Ago Iwoye Nigeria

Abstract

The equally uncharacterized nature of government role in Sub Saharan African (SSA) region on the issue of poverty reduction have surged the modest research of this study. The issue on poverty is a continuous cause and need remedies so much and fast. This study examined the effect of fiscal policy on poverty reduction in Sub-Saharan Africa from 1999 to 2016. Pool Mean Group (PMG) was employed to estimate the dynamic cause effect in SSA countries. Conversely with the study, it was estimated that PMG yielded a robust results as the adjusted period is dynamically stable. The projected adjusted period of disequilibrium gives 39% recovery period from disequilibrium problem. The out of pocket expenditure is negatively significance to poverty reduction among the selected SSA countries. The tax revenue is positive but insignificant to poverty reduction in SSA. The short run effect shows that while out of pocket expenditure posits positive and significant effect on poverty reduction, tax revenue is positive but insignificant to drive poverty reduction. The cross sectional short run estimate shows that all countries long run adjusted models are dynamically stables except in Ghana. However, the adjustment coefficient of Nigeria tends to adjust fast than any countries follow by Zambia, Angola, Ivory Coast and Botswana respectively. This study concludes that fiscal policy does not have poverty reduction relations in the region. It is therefore recommended that appropriate mechanism to ensure tax restructuring and monitoring from the region should be the utmost concerns of the policy maker.

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