Fofack, Hippolyte2012-03-192012-03-192009-09-01https://hdl.handle.net/10986/4235Over the past few decades, the foreign liabilities of the majority of countries in Sub-Saharan Africa have grown dramatically, propelling most nations into the status of Highly Indebted Poor Countries, when these liabilities reached unsustainable levels in the 1990s. At the same time, increases in capital flight from the region followed a parallel trend, leading scholars to draw on "revolving door" models to explain the apparent positive covariation of external debt and capital flight in the region. This paper investigates the causality between external debt and capital flight in a cross-section of Sub-Saharan African countries using co-integration and error-correction models. Although dual causality, which is consistent with the revolving door hypothesis, cannot be rejected for the majority of countries, empirical evidence highlights the lead of external debt over capital flight. The significance of error-correction terms points to a long-run co-integrating relationship between external debt and capital flight in a large number of countries.CC BY 3.0 IGOACCESS TO DEBTACCOUNTINGACCUMULATION OF DEBTARREARSASSETSAUTOREGRESSIONBALANCE OF PAYMENTBALANCE OF PAYMENT CRISISBALANCE OF PAYMENTSBALANCE OF PAYMENTS CRISISBALANCE-OF-PAYMENTS CRISESBANK DEBTBANK POLICYCAPITAL CONTROLSCAPITAL FLIGHTCAPITAL FLOWSCAPITAL FORMATIONCAPITAL INFLOWSCAPITAL INFUSIONCAPITAL OUTFLOWSCAPITAL STOCKCENTRAL BANKCOINCOMPETITIVENESSCORRELATION ANALYSISCORRELATION COEFFICIENTCOUNTRY RISKCOUNTRY RISKSCREDIBILITYCREDITORCREDITORSCURRENCY DEVALUATIONCURRENT ACCOUNTCURRENT ACCOUNT DEFICITCURRENT ACCOUNT DEFICITSCUSTOMS DUTIESDEBTDEBT CRISISDEBT DISBURSEMENTSDEBT OVERHANGDEBT RATIODEBT RATIOSDEBT REDUCTIONDEBT RELIEFDEBT SERVICEDEBT SERVICE PAYMENTSDEBT STRATEGYDEFICIT FINANCINGDEPENDENT VARIABLEDEPRECIATIONDESCRIPTIVE STATISTICDEVALUATIONDEVELOPING COUNTRIESDEVELOPMENT ASSISTANCEDEVELOPMENT BANKDISBURSEMENTDISEQUILIBRIUMDOMESTIC AGENTSDOMESTIC ARREARSDOMESTIC CREDITORSDOMESTIC DEBTDOMESTIC DEBT MARKETSDOMESTIC GOODSECONOMETRIC MODELSECONOMIC DEVELOPMENTECONOMIC DOWNTURNSECONOMIC GROWTHECONOMIC RESEARCHECONOMIC THEORYERROR CORRECTION MODELERROR CORRECTION MODELSERROR CORRECTION TERMERROR CORRECTION TERMSERROR TERMEXCHANGE RATESEXOGENOUS FACTORSEXPENDITUREEXPENDITURESEXPORT DIVERSIFICATIONEXPORTSEXPOSUREEXTERNAL BORROWINGEXTERNAL BORROWINGSEXTERNAL DEBTEXTERNAL DEBT ACCUMULATIONEXTERNAL DEBT INDICATORSEXTERNAL DEBT SERVICESEXTERNAL DEBT STOCKEXTERNAL DEBT SUSTAINABILITYEXTERNAL FINANCEEXTERNAL FINANCINGEXTERNAL INDEBTEDNESSEXTERNAL LIABILITIESFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL DEVELOPMENTFINANCIAL MARKETFISCAL DEFICITSFISCAL POLICYFOREIGN AIDFOREIGN CREDITORSFOREIGN CURRENCYFOREIGN EXCHANGEFOREIGN INDEBTEDNESSFOREIGN LIABILITIESFOREIGN RESERVESFUTURE RESEARCHGDPGLOBAL CAPITALGLOBAL MARKETGOVERNMENT GUARANTEEGROSS CAPITAL FORMATIONGROWTH RATEGROWTH RATESHOLDINGHOLDINGSIMPLICIT INSURANCEIMPORTIMPORT RESTRICTIONSIMPORTSINCOMEINCOME INEQUALITYINDEBTED COUNTRIESINFLATIONINFLATION TAXINSOLVENCYINSTRUMENTINSURANCEINSURANCE COVERAGEINTEREST EARNINGSINTEREST PAYMENTSINTEREST RATEINTEREST RATESINTERNATIONAL BANKINTERNATIONAL DEBTINTERNATIONAL FINANCIAL ARCHITECTUREINTERNATIONAL FINANCIAL INSTITUTIONSINTERNATIONAL FINANCIAL SYSTEMINTERNATIONAL MONEYINVESTMENT BOOMSLOCAL CURRENCYLONG-RUN EQUILIBRIUMLOW DEBTLOW DEBT RATIOSLOW-INCOME COUNTRIESWorld Bank10.1596/1813-9450-5042