Effets non linéaires de la politique budgétaire sur la croissance économique au Cameroun

Non-linear effects of fiscal policy on economic economic growth in Cameroon

Louis-Henri Ngah Ntiga

MPRA Paper from University Library of Munich, Germany

Abstract: The objective of this paper is to examine the non-linear effects of fiscal policy on economic growth in Cameroon conditional on external public debt. The results confirm the existence of non-linearities in the "fiscal policy - economic growth" relationship. Through the modelling logic of Hansen (2000) of threshold models, it was observed that the optimal threshold of the external debt in Cameroon is -38.98% of GDP. Thus, in a critical regime, fiscal policy does not favour economic growth. Moreover, when the level of of external debt exceeds the threshold of 12.014% of GDP (which corresponds to the current situation in Cameroon), tax revenues have recessionary effects on growth while current expenditure has expansionary effects. These results point out to the public authorities that excessive indebtedness can lead to disparities in the economy and that it is time to find other sources of financing than external debt, such as internal debt and oil revenues. Finally, the state should consider increasing current expenditure such as personnel costs in order to achieve growth and substantially reduce the tax rates that generate tax revenues.

Keywords: Fiscal policy; Economic growth; Threshold models (search for similar items in EconPapers)
JEL-codes: E62 F43 (search for similar items in EconPapers)
Date: 2022-04-27, Revised 2022-09-01
New Economics Papers: this item is included in nep-fdg
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