Public spending and the resource curse in WAEMU countries: An asymmetry analysis using the hidden cointegration and non-linear panel ARDL framework

Maamar Sebri, Ousseini Issoufou Ahmed and Hajer Dachraoui

Resources Policy, 2023, vol. 82, issue C

Abstract: In this paper, we analyze the long-run effect of natural resource endowment on total public spending, public education spending, and public health spending in WAEMU member countries. After checking the cross-section dependence and unit root of the variables, this study uses the pooled mean group estimation technique within linear and non-linear panel ARDL models to investigate (a)symmetry effects in the relationship between variables. empirical results suggest that the resource curse hypothesis holds, meaning that natural resources adversely affect public spending. Across multiple specifications, our results support also the crowding-out effect and the institutional channel through which natural resources impact public spending. It seems therefore that the WAEMU countries still fail to transform the resource wealth advantage into favorable development outcomes. In light of the results, a few policy options are discussed in this paper.

Keywords: Asymmetry; Hidden cointegration; Natural resource curse; Non-linear panel ARDL; Public spending; WAEMU (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:82:y:2023:i:c:s0301420723003021

DOI: 10.1016/j.resourpol.2023.103591

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