An evaluation of the KIPPRA-Treasury Macro Model and Kenya's economy using historical simulations
In: KIPPRA discussion paper no. 59
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In: KIPPRA discussion paper no. 59
In: CESifo working paper series 1034
In: Fiscal policy, macroeconomics and growth
HIV/AIDS pandemic in Africa has been closely associated with adverse economic effects, and could thwart the success of poverty reduction initatives. HIV/AIDS is fast eroding the health benefits, which Kenya gained in the first two decades of independence. The paper explores the different channels through which HIV/AIDS affects economic growth in a low-income country like Kenya. Within this framework, the paper attempts to analyse the impact of HIV/AIDS on Kenya's economic growth by way of simulations using a macroeconomic model for the Kenyan economy. Some of the key channels explored are the impact of HIV/AIDS on productivity and labour force supply; asset accumulation of human, physical and social capital; and the gender channel.
In: Discussion paper series 16
In: The review of black political economy: analyzing policy prescriptions designed to reduce inequalities, Band 38, Heft 3, S. 227-242
ISSN: 1936-4814
Empirical evidence on the link between trade and employment outcomes in Africa is severely limited. The paper analyses employment outcomes, that is, the rise in casual employment in Kenya's manufacturing sector in relation to firms' export orientation. While exporting firms generally account for a higher proportion of employment in the manufacturing sector, the proportion of workers in exporting firms declined by over 20% between the early 1990s and 2003. On the other hand, the proportion of casual workers employed in manufacturing firms increased over the same period. However, the empirical results show no strong evidence of "exporting" significantly influencing the proportion of casual workers employed by firms. The combination of an increasingly skilled labour force in Kenya and deepening casualisation among workers points to a conundrum that requires further analysis. That notwithstanding, the results suggest a need for policy focus not only on job creation, but also on the quality of jobs created.
A group of low-income countries classified as HIPCs have continued to experience difficulties in managing and servicing their huge stocks of external debt. Most of these countries including Kenya are in Sub-Saharan Africa. The relatively high level of Kenya's external indebtedness and rising debt burden has serious implications on the country's development and debt sustainability initiatives. While the economic performance continue to deteriorate, there has been significant net outflow of resources to meet the debt obligations in the 1990s. This paper examines the structure of Kenya's external debt and its implications on economic growth. The findings of the study indicate that Kenya's external debt is mainly official, of which a bigger proportion is from multilateral sources. External debt accumulation has been rising over the years with debt burden indicators increasing steadily in the early 1990s. Using time series data for the period 1970- 95, the empirical results indicated that external debt accumulation has a negative impact on economic growth and private investment. This confirms the existence of a debt overhang problem in Kenya. However, the results also indicated that current debt inflows stimulate private investment. Debt servicing does not appear to affect growth adversely but has some crowding-out effects on private investment. Several policy implications emerge from the study. The simultaneous attainment of sustainable levels of economic growth and external debt appear difficult at the moment and could remain elusive if aggressive measures are not undertaken. In view of the current economic recession and the negative net outflows, the results obtained from this study support the need for Kenya to be considered for comprehensive debt relief measures. There are prospects that availability of these resource flows can stimulate private investments if used productively. A key challenge to the government remains that of ensuring efficiency in delivery of services and increased productivity of public investments. In addition, creating credibility including commitment and political will to reform implementation is required to spur investor confidence for both local and foreign investments.
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Rising public debt in sub-Saharan Africa remains a matter of concern. We provide an analysis of public debt and debt sustainability in Tanzania, focusing on external debt. Though current and previous analyses using the IMF-World Bank debt sustainability framework indicate low risk of public external debt distress, these analyses are sensitive to exchange rate volatility and export shocks and are predicated on strong assumptions of robust future economic growth and reduced government borrowing. Moreover, empirical evidence of debt sustainability based on the fiscal reaction function approach is weak. The challenge lies in ensuring debt remains sustainable, given the need to scale up development expenditure to address infrastructure gaps amid dwindling donor financing and vulnerability to exogenous shocks, particularly in light of the COVID-19 pandemic. Rapid debt accumulation-particularly commercial debt-could expose Tanzania to external risks. Leveraging on concessional borrowing, efficient public investment, enhanced debt management, and domestic resource mobilization are critical.
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In: Discussion paper series 10