An investigation into the effect of budget deficit on the economic performance of Zimbabwe

Figures & data

Table 1. Budget deficit and economic ranking for selected countries

Rank	Country	% of budget deficit to GDP
1	USA	14.9
2	China	13.6
3	Japan	12.2
4	Venezuela	58.2
5	United Kingdom	9.2
–	–	–
120	Zimbabwe	12.8

Source: World Bank 2017

Table 2. Co-integration results

Maximum Rank	Parms	LL	Eigenvalue	Trace Statistic	5% critical value
0	5	−672.18		86.2780	68.52
1	14	−655.24	0.8797	52.3913	47.21
2	21	−642.92	0.7855	27.7580*	29.68
3	26	−632.71	0.7209	7.3355	15.41
4	29	−629.87	0.2985	1.6638	3.76
5	30	−629.04	0.0987

Source: Own calculations.

Table 3. Lag selection

Lag	LL	LR	Df	p	FPE	AIC	HQIC	SBIC
0	−128.608				3.3e+06	17.8144	17.8118	18.0504
1	−118.57	20.074*	1	0.000	1.0e+06*	16.6094*	16.6064*	16.8926*
2	−118.568	0.00473	1	0.945	1.2e+06	16.7424	16.7389	17.0728
0	−110.87				3.4e+06	17.8262	17.7815	18.0435
1	−103.127	15.486*	1	0.000	1.2e+06	16.7888*	16.7352*	17.0495*
2	−103.126	0.00151	1	0.969	1.5e+06	16.9425	16.8800	17.2467
3	−102.922	0.40865	1	0.523	1.9e+06	17.0649	16.9934	17.4126
4	−102.63	0.58454	1	0.445	2.3e+06	17.1738	17.0934	17.5649

Source: Own calculations.

Table 4. Stationarity test results

Variable	Lag	T-statistic	1% LOS	5% LOS	10% LOS	P- value
RGDP	0	0.504	−3.750	−3.000	−2.630	0.9850
RGDP	1	−0.255	−3.750	−3.000	−2.630	0.9317
RGDPD1	0	−2.410	−3.750	−3.000	−2.630	0.1389
RGDPD2	0	−5.527	−3.750	−3.000	−2.630	0.000*
Budget deficit	0	−2.649	−3.750	−3.000	−2.630	0.0834*
Investments	0	−3.237	−3.750	−3.000	−2.630	0.0179*
Net Exports	0	−1.296	−3.750	−3.000	−2.630	0.6310
Net ExportsD1	0	−4.488	−3.750	−3.000	−2.630	0.0002*
Consumption	0	−1.524	−3.750	−3.000	−2.630	0.5215
ConsumptionD1	0	−9.206	−3.750	−3.000	−2.630	0.0000*

Notes: *Indicates stationary data.

Source: Own Calculations.

Table 5. Multicollinearity results

Source	SS	Df	MS
Model	301082273	4	75270568.2
Residual	30563572.4	12	246964.37
Total	331645845	16	20727865.3

Notes: Number of observations = 17; F (4, 12) = 29.55; Prob > F = 0.0000; R- Squared = 0.9078; Adjusted R-Squared = 0.8771; Root MSE = 1595.9.

Source: Own Calculations.

Table 6. Autocorrelation results

Lags (p)	Chi2	df	Prob > Chi2
1	0.178	1	0.6735

Source: Own Calculations.

Table 7. Regression Results

RGDPD2	Coef	Std Err	t	P > | t |	95% Conf	Interval
Budget deficit	−2.59285	0.9905488	−2.62	0.022	−4.75107	−0.4346296
Consumption D1	0.728294	0.2146282	3.39	0.005	0.2606592	1.195929
Constant	869.8099	1109.801	0.78	0.448	−1548.239	3287.859

Source: Own Calculations.

Worldbank, 2017. Zimbabwe economic update June 2017. World Bank, New York.

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