Stability pact and risk of pro-cyclical fiscal policy in Economic and Monetary Union countries: the case of UEMOA

Mamadou Diop
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Mamadou Diop: CREM UMR CNRS 6211, University of Rennes 1, France

Economics Working Paper Archive (University of Rennes & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS

Abstract: In December 1999, the WAEMU countries have adopted the Pact of Convergence, Stability, Growth and Solidarity which states in its corrective arm, the basic fiscal balance, relative to nominal GDP, must be balanced. Implying that the presence of an unexpected adverse economic conditions, governments have a choice between respecting the fiscal criterion of the Covenant and not to support economic activity or stimulate economic activity through public spending and not meet the key criteria of the pact. This article's objective is to highlight the failures of the fiscal rule cannot be a lever action of public authorities and the consequences if it does not take into account the state of the economy. Two types of fiscal policies can be distinguished according to the economic situation: procyclical policy changing in the same direction as the business cycle and countercyclical fiscal policy that seeks to minimize fluctuations in economic conditions.

Keywords: Politique budgétaire procyclique; UEMOA (WAEMU); Pacte de convergence et de stabilité; Solde budgétaire de base; Politique budgétaire contracyclique (search for similar items in EconPapers)
JEL-codes: C5 E6 (search for similar items in EconPapers)
Date: 2013-11, Revised 2014-05
New Economics Papers: this item is included in nep-afr and nep-mac
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