Ricardian neutrality: A limit to the analysis of the debt sustainability of CEMAC countries

La neutralité ricardienne: Une limite à l'analyse de la viabilité de la dette des pays de la CEMAC

Pierre Gaëtant Ango Nguema () and Sydney Leslie Dibounda Sima
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Pierre Gaëtant Ango Nguema: CERDIMO - Centre d'Etude et de Recherche en Développement International et du Management des Organisations - INSAB - Institut National Supérieur d'Agronomie et de Biotechnologie - USTM - Université des Sciences et Techniques de Masuku
Sydney Leslie Dibounda Sima: CEP - Centre d'Economie Publique - Institut National des Sciences de Gestion de Libreville

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Abstract: The study examines the distribution of overindebtedness across macroeconomic aggregates by empirically verifying the validity or otherwise of Ricardian equivalence as a main limitation to the analysis of debt sustainability within the panel of Economic and Monetary Community countries. of Central Africa chosen for the period 2000-2023. From the ARDL approach, parameterized as an error correction model (ECM), the results indicate that the level of private investment remains low in the face of episodes of long-term debt crisis, with insignificant effects of tax policy. However, private investment constitutes a channel of transmission of overindebtedness and rejects the principle of Ricardian equivalence (PER), which favors the analysis of debt sustainability (DSA). The results estimated by Ordinary Least Squares (OLS) and Generalized Least Squares (GLM) reveal that consumption is also a channel of transmission of over-indebtedness. However, the tax base plays an important role in this transmission and validates the PER, which tends to limit the DSA of countries in the sub-region. Overall, these results prove the existence of expectations of economic agents in the face of an increase in taxes intended to repay the loan to the extent that these agents are victims or not of the fiscal illusion according to very specific transmission channels. over-indebtedness. These results are robust to a variety of alternative specifications.

Keywords: Équivalence ricardienne Surendettement Politique fiscale ARDL MCG. JEL Classification : B22 C33 E13 F34 Type du papier : Recherche empirique Ricardian equivalence Overindebtedness Fiscal policy ARDL MCG. Classification JEL : B22 C33 E13 F34 Paper type: Empirical Research; Équivalence ricardienne; Surendettement; Politique fiscale; ARDL; MCG. JEL Classification : B22; C33; E13; F34; Type du papier : Recherche empirique Ricardian equivalence; Overindebtedness; Fiscal policy; MCG. Classification JEL : B22; Paper type: Empirical Research (search for similar items in EconPapers)
Date: 2024-07-01
New Economics Papers: this item is included in nep-inv
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Published in International Journal of Accounting, Finance, Auditing, Management and Economics, inPress, ⟨10.5281/zenodo.12638523⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04637772

DOI: 10.5281/zenodo.12638523

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