Impact of Public Investment on Private Investment in Sub‐Saharan Africa: Crowding In or Crowding Out?

This paper investigates the possible crowding‐in or crowding‐out effect of public investment on private investment in sub‐Saharan Africa. While this relationship has been theoretically and empirically studied in the literature, most studies used traditional panel fixed effects or Generalized Method of Moments estimators which can potentially lead to biased and inconsistent estimates. We employ heterogeneous parameter models, including the Mean Group, the Common Correlated Effects Mean Group Model, and the Augmented Mean Group estimators, to incorporate the possibility of slope heterogeneity and the presence of cross‐sectional dependence. Using a large sample of 44 sub‐Saharan African countries over the period 1960–2015, we find that on average public investment crowds in private investment in sub‐Saharan Africa. We also find that the impact differs between countries and is higher in countries with a strong private sector.     

Access to savings and household welfare evidence from a household survey in The Gambia

In this study, we provide evidence on the impact of access to formal savings on household well‐being in The Gambia. Specifically, we study how access to formal savings can impact household outcomes such as total spending, ownership of durable assets, health spending, and education spending. Using a representative household survey and kernel ridge regression method, we find that household access to formal savings has a positive and statistically significant impact on all outcomes except health spending. Furthermore, we find that the largest effect size of access to savings is on education spending. However, the impact estimates on education and food expenditure are not very robust to a mild presence of hidden bias. Overall, we find a robust impact for total spending and asset ownership. Hence, increasing household access to formal savings can improve household well‐being in The Gambia.     

Aid,growth and institutions in Sub‐Saharan Africa: New insights using a multiple growth regime approach

Numerous sub‐Saharan African countries depend heavily on foreign aid. This paper explores the impact of foreign aid on economic growth in the continent using a finite mixture model. Contrary to previous studies, we hypothesise that the effect of aid on growth differs across groups of countries with similar but unobserved characteristics. The paper incorporates the potential presence of hidden heterogeneity and tries to explain group membership of countries by using various metrics of institutional variables. Focusing on a sample of 25 countries, we find that the impact of foreign aid on growth differs across three different groups of countries. Moreover, we find that aid works best in countries with effective government, good regulatory quality and low corruption. The results are robust to a battery of robustness checks. The paper underlines the importance of incorporating the heterogeneity in growth process in studies on aid effectiveness and provides evidence that sub‐Saharan African countries should undertake deep governance reforms to benefit from foreign aid.