Exploring the Impact of Fiscal Sustainability on Economic Growth: Evidence from Sierra Leone

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CRITICAL VALUE INFERENCE RGDP -3.675** -3.528 I(0) D.PS -7.175 ** -3.532 I(1) D.CORR -4.112** -1.685 I(1) D.LnREV -7.435** -3.532 I(1) D.GEX -4.814 ** -3.532 I(1) D.LnPD -3.832** -1.685 I(1) LnTDS -3.036** -1.684 I(0) D.FDI -6.483** -2.952 I(1) NOTES: '*' '**' '***' - Significant at 1%, 5% & 10% respectively Source: Author Table 2: Stationarity Test PP TEST VARIABLES Z(t) LAGS CV INFERENCE D.RGDP -6.483** 3 -3.528 I(1) PS -6.196** 3 -3.524 I(0) D.CORR -6.784** 3 -3.528 I(1) LnREV -6.440** 3 -3.524 I(0) D.GEX -5.345** 3 -3.528 I(1) D.LnPD -7.849 ** 3 -3.528 I(1) LnTDS -4.256** 3 -3.524 I(0) FDI -4.191** 3 -2.947 I(0) NOTES: '*' '**' '***' - Significant at 1%, 5% & 10% respectively source: Author Appendix 2: Structural Break Traditional unit root tests, like ADF and PP tests, are inefficient when structural breaks occur. In time series analysis, structural breaks can be verified either exogenously (Perron, 1989) or endogenously (Bai & Perron, 2003). This study employed the former as it is suitable in using prior knowledge of significant historical, economic, or institutional events, like policy reforms, COVID- 19, or the 2008 financial crisis, that are known to have caused shifts over the years. Exogenous approach enhances the interpretability and theoretical consistency of the model, particularly when the timing and impact of the event are well-documented. In Sierra Leone, the 2014 twin shocks refer to two significant simultaneous crises (Ebola virus disease outbreak and collapse in iron ore prices) that tremendously disrupted the economic structure of the nation; thus, a dummy variable is generated to capture these events is incorporated in the model.