The impact of the Financial Policy Tools on Economic Cycles in Sudan Economy during the period (1990-2022): An Econometric Study by using Switching Regression

Abstract

The study dealt with one of the state intervention mechanisms to control the negative effects of economic cycles, and worked to reveal the impact of the financial policy tools on the economic cycles in Sudan economy during the period 1990-2022, and for the interrelationships between financial policy and the effects of the economic cycles, it used the econometric methodology by focusing on time series data and switching regression model, and it concluded that there is a negative relationship between each of current spending, indirect taxes and the rate of economic growth, and that the relationship between development spending and the rate of economic growth is positive in first regime, and negative in the second regime(-1.21), and this shows the extent of the weakness of the financial policy efficiency that worked to direct a large percentage of public expenditures to current spending, and there was a negative relationship between direct taxes and economic growth rate(-0.25), and this confirms that financial policy dose not depend on direct taxes, and recommended the need to increase spending on development to improve the productive capacity efficiency, and interduce the direct taxe for its positive impact on the rate of growth and reduce the effects of economic sycles.