Effect of Inflation Risk on the Public Debt in Kenya
Abstract
Purpose: To examine the effect of inflation risk on the public debt in Kenya
Design/Methodology/Approach: The study employed quantitative approaches to empirical study the relation to independent variables and the dependent variable. A longitudinal and correlational design was used since it employed time series data to establish a relationship between the systematic risks and the national debts without manipulating the variables. The study used secondary data extracted from economic indicators and statistical abstracts from the respective ministries, Kenya National Bureau of Statistics (KNBS), CBK, IMF and the World Bank during the period under study. Data was analyzed using STATA software and presented in figures and tables.
Findings: The ordinary least square regression R2 value of 0.8001 and the adjusted R2 of 0.743 confirm that the model has a strong impact. The findings for correlation analysis reveals significant relationships between public debt levels and systematic risk variables. Inflation risks (r= 12.6151, p= 0.0001), indicating that inflation rates are associated with high public debt levels.
Implications/Originality/Value: Therefore, the study concludes that inflation is critical for promoting the public debt levels in Kenya.
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References
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