Les Effets Non Lineaires Des Deficits Budgetaires Sur L´Activite Economique En Cemac

Threshold Effects of Budgetary Policy on Economic Growth in Cemac

Jacques Landry Bikai

MPRA Paper from University Library of Munich, Germany

Abstract: CEMAC countries, with an aim of coordinating their budget policies, established within their union some rules of economic policy which seem to be restrictive for an effective budget policy and thus sustainable in the long run. Indeed, in the economic theory, several arguments were advanced to justify the effectiveness of budget policy with a view to stabilization. For some, expansionist budget policies can have favorable effects on the economic activity, while for others, this kind of policy does not have any effect and can even be harmful for the activity; it would be then in this case more adapted to follow a contractionnist policy. Nevertheless, these two effects can coexist on the activity, thus putting forward the nonlinear character of budget policy on the activity. The objective of this study is thus to appreciate the nature of the relation between budget policy and the activity in CEMAC by taking of account the existence of possible nonlinear effects of the budget policy.For that, we initially test the stationnarity of the debt on GDP ratio of the countries in the zone over the period 1970-2006 and thus conclude that, budget policies of the countries in CEMAC zone were not sustainable and thus ineffective. In the second time, the methodology of endogenous thresholds of Hansen (1996, 1999) made it possible to determine a rate of debt of 79% of the GDP, below which the expansionist policies have favorable effects on the activity, and with the top of which contractionnists policies become effective.

Keywords: Deficit; debt; budget policy; economic growth; threshold effects; panel data (search for similar items in EconPapers)
JEL-codes: E62 H62 H63 (search for similar items in EconPapers)
Date: 2010-08-19
New Economics Papers: this item is included in nep-afr
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Citations: View citations in EconPapers (3)

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