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An empirical analysis of government interventions in ECOWAS: evidence from dynamic panel threshold

Author

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  • Olumide Olusegun Olaoye
  • Ambreen Noman
  • Ezekiel Olamide Abanikanda

Abstract

Purpose - The study examines whether the growth effect of government spending is contingent on the level of institutional environment prevalent in Economic Community of West African States (ECOWAS). Design/methodology/approach - The study adopts the more refined and more appropriate dynamic threshold panel by Seo and Shin (2016) and made applicable be Seoet al.(2019). The technique models a nonlinear asymmetric dynamics and cross-sectional heterogeneity simultaneously in a dynamic threshold panel data framework. Findings - The results show that there is a threshold effect in the government spending-growth relationship. Specifically, the authors found that the impact of government spending on economic growth is positive and statistically significant only above a certain threshold level of institutional development. Below that threshold, the effect of government spending on growth is insignificant and negative at best. The findings suggest that government spending-growth nexus is contingent on the level of Institutional quality. Originality/value - Unlike previous studies that adopt the linear interaction model which pre-imposea prioriconditional restrictions, this study adopts the dynamic threshold panel framework which allows the lagged dependent variable and endogenous covariates.

Suggested Citation

  • Olumide Olusegun Olaoye & Ambreen Noman & Ezekiel Olamide Abanikanda, 2021. "An empirical analysis of government interventions in ECOWAS: evidence from dynamic panel threshold," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 18(8), pages 1892-1916, July.
    • Handle: RePEc:eme:ijoemp:ijoem-08-2020-0979
    DOI: 10.1108/IJOEM-08-2020-0979
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    Cited by:

    1. Olumide O. Olaoye & O. J. Omokanmi & Mosab I. Tabash & S. O. Olofinlade & M. O. Ojelade, 2024. "Soaring inflation in sub-Saharan Africa: A fiscal root?," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(1), pages 987-1009, February.

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