Abstract: Government debt is one of the main macroeconomic variables that determine a state's standing in the global market. It is the elements influencing the inflow of overseas investment. Prudent communal debt administration encourages commercial stability and growth by leveraging resources at low borrowing costs and lowering financial risk exposure. The main subjects of this study are the public debt in Kenya and its connection to economic growth from 2011 to 2021. Most developing nations will anticipate a beneficial impact of public debt on economic progress. Therefore, government spending that would promote economic growth should be financed with funds from public bill. Equating to foreign arrears, there exist a weighty development in household dues, which leads to enquiries on how it will influence investments in Kenya. The empirical exploration, however, shows the opposite. The research also aims to establish the relationship between Kenya's financial development and its foreign dues, domestic arrears, and the overall cost of the debt payment. The Keynesian model and the Debt Overhang Hypothesis, has two opposing framework visions on state’s debit outdate view and the Ricardian view—guided the analysis. GDP served as the dependent variable, and variations in public borrowings, the jobless rate, inflation, and total debt served as the predictor factors.From 2011 to 2021, data were gathered for all the parameters. According to the regression analysis findings, the constant was found to be 84.0, with the variables for inflation, the joblessness ratio, public inland arrears, and revolution in aggregate dues being 0.09, 0.39, 0.36, and 0.35 correspondingly. Results showed the difference in 1(one) unit of overall debts could result in a decrease of 6.0 units of internal product. In comparison, a variation in 1 unit of local government debt increases 5.9 units of local produce. Additionally, a change in joblessness would cause a decrease in the domestic product of 0.4 units for every unit that changed. Finally, 0.75 units of the domestic product would decrease for every unit of inflation. Rendering to the outcomes of the correspondence analysis, there is a negative link in GDP and each of the four explanatory factors taken into account. However, there is a major connection between aggregate inflation and debts. The regression model's probability value was deduced from the ANOVA findings. It was found to be 0.04, suggesting the model's importance in describing the link between the GDP and the factors under consideration.
Keywords: Government debt, Macroeconomic variables, Commercial stability, Public borrowings, GDP.
Title: Relationship between Public Debt and the Economic Growth in Kenya
Author: Faith Kananu Kobia, Dr. Jane Omwenga, Dr. Agnes Njeru
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
Vol. 10, Issue 4, October 2022 - December 2022
Page No: 375-388
Research Publish Journals
Website: www.researchpublish.com
Published Date: 26-October-2022
