A Re-Evaluation of Fiscal Cyclicality in WAEMU Countries

Bezeme Yves Valery Franck

Working Papers from African Economic Research Consortium

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 Vegh (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

Date: 2022
Note: African Economic Research Consortium
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Persistent link: https://EconPapers.repec.org/RePEc:aer:wpaper:80cd3394-017c-4e30-b79c-c8fac2df8ba3

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