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Fiscal Rules and the Pro‐cyclicality of Public Investment in the West African Economic and Monetary Union

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  • Sébastien Dessus
  • Jose L. Diaz‐Sanchez
  • Aristomene Varoudakis

Abstract

Evidence from a large panel of low‐income and lower middle‐income countries over the period 1995–2012 suggests that, contrary to that in other countries, public investment in the West African Economic and Monetary Union has been pro‐cyclical. Public investment contracts more in ‘bad times’ than it increases in ‘good times’ and appears to have become pro‐cyclical since the introduction of the fiscal convergence criteria in 1994. The pro‐cyclicality of public expenditure and the high asymmetry of shocks that affect West African Economic and Monetary Union countries justify exploring options for greater counter‐cyclicality of rules‐based fiscal frameworks and for risk sharing. Copyright © 2014 John Wiley & Sons, Ltd.

Suggested Citation

  • Sébastien Dessus & Jose L. Diaz‐Sanchez & Aristomene Varoudakis, 2016. "Fiscal Rules and the Pro‐cyclicality of Public Investment in the West African Economic and Monetary Union," Journal of International Development, John Wiley & Sons, Ltd., vol. 28(6), pages 887-901, August.
    • Handle: RePEc:wly:jintdv:v:28:y:2016:i:6:p:887-901
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    Cited by:

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    2. Gladys Awinpoak Abindaw Nabieu & Godfred Alufar Bokpin & Achampong Kofi Osei & Patrick Opoku Asuming, 2021. "Fiscal rules, fiscal performance and economic growth in Sub‐Saharan Africa," African Development Review, African Development Bank, vol. 33(4), pages 607-619, December.
    3. Guerguil, Martine & Mandon, Pierre & Tapsoba, René, 2017. "Flexible fiscal rules and countercyclical fiscal policy," Journal of Macroeconomics, Elsevier, vol. 52(C), pages 189-220.
    4. Alabi, M. K. & Amirthalingam, K., 2020. "Fiscal Policy and the Business Cycle in the West African Monetary Zone," Working Papers 8, Department of Economics, University of Ilorin.
    5. Ryota Nakatani, 2021. "Fiscal Rules for Natural Disaster- and Climate Change-Prone Small States," Sustainability, MDPI, vol. 13(6), pages 1-26, March.
    6. Combes, Jean-Louis & Minea, Alexandru & Sow, Moussé, 2017. "Is fiscal policy always counter- (pro-) cyclical? The role of public debt and fiscal rules," Economic Modelling, Elsevier, vol. 65(C), pages 138-146.
    7. Cezara Vinturis, 2019. "A multi-speed fiscal Europe? Fiscal Rules and Fiscal Performance in the EU Former Communist Countries," Working Papers hal-03097483, HAL.
    8. Slawomir Franek & Marta Postula, 2020. "Does Eurozone Membership Strengthen the Significance of Fiscal Instruments?," Annals of Economics and Finance, Society for AEF, vol. 21(1), pages 131-151, May.

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