NEW WORKING PAPER: We revisit the relationship between fiscal tightening and economic growth within the Sub-Saharan African context, employing a local projection framework augmented with instruments. In contrast to the conclusions reached by Badru et al. (2025), our findings highlights that fiscal consolidation triggers the growth-depressing effect, independent of the estimation technique used. This contractionary impact intensifies under heightened global uncertainty whether gauged through geopolitical tension metrics or economic policy unpredictability measures.
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- Tao, M., Saadaoui, J., & Silva, E. (2025). How Robust Is the Link Between Growth and Fiscal Consolidations Under Global Uncertainties? A Reassessment for Sub-Saharan Africa (May 14, 2025). Available at SSRN: 5253621.
Note: during episodes of high geopolitical risk (above the 25th percentile of the sample distribution), fiscal consolidations induce a negative cumulative response of the real GDP per capita in Sub-Saharan Africa. We used significance band tests: