The Cyclicality of Fiscal Policies in the CEMAC Region

Gaston Mpatswe, Sampawende Tapsoba and Robert York

No 2011/205, IMF Working Papers from International Monetary Fund

Abstract: This paper examines fiscal cyclicality in the CEMAC region during 1980-2008. The issue has attracted very little empirical interest but is important if fiscal policies are to play a role in mitigating external shocks that exacerbate economic cycles across the region. We assess whether fiscal policies across these six countries have been procyclical using panel data to elaborate our analysis. Like in other sub-Saharan countries, total public expenditure in the CEMAC is found to be strongly procyclical. This is most pronounced for public investment, which overreacts to output growth with elasticity above 1. We further find that institutional weaknesses and poor governance partly explain this behavior. In contrast, the existence of an IMF-supported program can be a counterbalancing influence in attenuating this bias.

Keywords: WP; government spending; CEMAC country; fiscal procyclicality; multilateral surveillance; monetary union; CEMAC member country; oil-producing country; CEMAC subregion; CEMAC fiscal policies country; cyclicality coefficient; countercyclical fiscal policy; CEMAC members Cameroon; Fiscal stance; Public investment spending; Procyclicality; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 21
Date: 2011-08-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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