A Re-Evaluation of Fiscal Cyclicality in WAEMU Countries
Date
2022
Authors
Franck, Bezeme Yves Valéry
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Abstract
The main goal of this study is to characterize and explain the cyclical behaviour of
fiscal policy of countries in the West African Economic and Monetary Union (WAEMU)
zone. To carry out the investigation, cyclicality was studied in an empirical manner
using theoretical models formulated by Ilzetzki and Végh (2008). We found that the
level of fiscal procyclicality varies with the type of budgetary expenditures. The study
discusses various factors that could explain why fiscal policy is often procyclical.
The results obtained using an econometric model tested in a dynamic panel show
that multilateral rules, supported by the work of credible budgetary institutions, the
reduction of the rate of external debt, and better access to concessional financing
calculated through the flows of public aid to the most important development
projects, seem to be necessary for implementation of the anticyclical budgetary
policy in the region
Description
Keywords
Fiscal stabilization, Fiscal process, LSDVC, GMM, WAEMU