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Analysis of Budget Imbalance Dynamics in Kenya

Journal of Economics and Public Finance

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Title Analysis of Budget Imbalance Dynamics in Kenya
 
Creator Oguso, Alex
Mwega, Francis M.
Wawire, Nelson H.
Samanta, Purna
 
Description Kenya needs substantial and sustained fiscal consolidation to create fiscal space for financing the government’s election pledges, the Vision 2030 development projects, and sustainable development goals. However, the government has found it hard to sustain its fiscal consolidation attempts. This study investigates the fiscal consolidation constraints that act through the budget imbalance dynamics in Kenya using the Olivera-Tanzi effect approach. The study covers the period 2000-2015 using time series data and employs three Auto-regressive Distributed Lag (ARDL) error correction models in the analysis. The study showed that a rise in the general price levels in the economy, adjustment of minimum wages, rise in perceived levels of corruption in the public sector and the political budget cycles (occurrence of a general election) worsen the budget imbalances (deficits) thus constrain fiscal consolidation efforts in Kenya. The study also demonstrated that budget imbalance dynamics in Kenya could partly be explained by the Olivera-Tanzi proposition. The study recommends measures to reduce the fiscal imbalance gap in Kenya, which include controlling both supply and demand side inflationary pressure and dealing with rent seeking behavior in the public sector.
 
Publisher SCHOLINK INC.
 
Contributor —
 
Date 2018-11-24
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.scholink.org/ojs/index.php/jepf/article/view/1707
10.22158/jepf.v4n4p352
 
Source Journal of Economics and Public Finance; Vol 4, No 4 (2018); p352
2377-1046
2377-1038
 
Language eng
 
Relation http://www.scholink.org/ojs/index.php/jepf/article/view/1707/1842
 
Rights Copyright (c) 2018 Alex Oguso, Francis M. Mwega, Nelson H. Wawire, Purna Samanta
http://creativecommons.org/licenses/by/4.0