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The Cyclicality of Fiscal Policies in the CEMAC Region

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  • Mr. Gaston K Mpatswe
  • Mr. Sampawende J Tapsoba
  • Mr. Robert C York

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.

Suggested Citation

  • Mr. Gaston K Mpatswe & Mr. Sampawende J Tapsoba & Mr. Robert C York, 2011. "The Cyclicality of Fiscal Policies in the CEMAC Region," IMF Working Papers 2011/205, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2011/205
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    Cited by:

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    2. Ribeiro, Ana Paula & Carvalho, Vitor & Sanches, Hélder, 2021. "Debt dynamics and fiscal policy stance in Cape Verde: Is there evidence of pro-cyclical behavior?," MPRA Paper 111305, University Library of Munich, Germany.
    3. Carlos Caceres & Marcos Poplawski-Ribeiro & Darlena Tartari, 2013. "Inflation Dynamics in the CEMAC Region," Journal of African Economies, Centre for the Study of African Economies, vol. 22(2), pages 239-275, March.
    4. Jean-Louis Combes & Rasmané Ouedraogo, 2014. "Does Pro-cyclical Aid Lead to Pro-cyclical Fiscal Policy? An Empirical Analysis for Sub-Saharan Africa," Working Papers halshs-01084600, HAL.
    5. BIKAI, J. Landry, 2015. "Fiscal Rules and Pro-cyclicality of the Fiscal Policy in CEMAC countries," MPRA Paper 78229, University Library of Munich, Germany.
    6. Vigninou GAMMADIGBE & Ismaël ISSIFOU & Daouda SEMBENE & Sampawende J.-A. TAPSOBA, 2018. "Convergence et divergence budgétaire en Afrique : le rôle des Communautés économiques régionales et des Unions économiques et monétaires," Working Papers P217, FERDI.
    7. Etoundi Atenga, Eric Martial, 2017. "On the Determinants of output Co-movements in the CEMAC Zone:Examining the Role of Trade, Policy Channel, Economic Structure and Common Factors," MPRA Paper 82091, University Library of Munich, Germany.
    8. Rasmane Ouedraogo, 2015. "Does pro-cyclical fiscal policy lead to more income inequality? An empirical analysis for sub-saharan Africa," Economics Bulletin, AccessEcon, vol. 35(2), pages 1306-1317.
    9. Paloviita, Maritta & Ikonen, Pasi, 2016. "How to explain errors in budget balance forecasts in euro area countries? Empirical evidence based on real-time data," Research Discussion Papers 17/2016, Bank of Finland.
    10. Guerguil, Martine & Mandon, Pierre & Tapsoba, René, 2017. "Flexible fiscal rules and countercyclical fiscal policy," Journal of Macroeconomics, Elsevier, vol. 52(C), pages 189-220.
    11. Paloviita, Maritta & Ikonen, Pasi, 2016. "How to explain errors in budget balance forecasts in euro area countries? Empirical evidence based on real-time data," Bank of Finland Research Discussion Papers 17/2016, Bank of Finland.
    12. repec:zbw:bofrdp:2016_017 is not listed on IDEAS
    13. Maritta Paloviita & Pasi Ikonen, 2018. "Real-time uncertainty in budget planning: evidence from euro area countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 21(4), pages 281-300, October.
    14. João T. Jalles, 2020. "Explaining Africa's public consumption procyclicality: Revisiting old evidence," International Finance, Wiley Blackwell, vol. 23(2), pages 297-323, August.
    15. TAPSOBA, Sampawende J.-A. TAPSOBA & SEMBENE, Daouda & GAMMADIGB, Vigninou & ISSIFOU, Ismaël, 2019. "Fiscal Convergence in Africa: What Role for Regional Economic Communities?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 34(2), pages 214-235.
    16. Mr. Sampawende J Tapsoba & Mr. Robert C York & Neree C.G.M. Noumon, 2016. "Can Statistical Capacity Building Help Reduce Procyclical Fiscal Policy in Developing Countries?," IMF Working Papers 2016/209, International Monetary Fund.
    17. Jalles, João Tovar, 2020. "Social expenditure cyclicality: New time-varying evidence in developing economies," Economic Systems, Elsevier, vol. 44(3).
    18. Maritta Paloviita & Pasi Ikonen, 2018. "Real-time uncertainty in budget planning: evidence from euro area countries," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 21(4), pages 281-300, October.
    19. Carneiro,Francisco Galrao & Garrido,Leonardo, 2015. "New evidence on the cyclicality of fiscal policy," Policy Research Working Paper Series 7293, The World Bank.

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