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Structural Vulnerability and Excessive Public Indebtedness in CFA Franc Zone Countries

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  • Sena Kimm GNANGNON

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Abstract

This paper relies on the ‘institutional debt rule’ implemented in Franc Zone countries to assess whether the structural vulnerability of these countries matter for their probability to enter into excessive indebtedness. This structural vulnerability is measured by retrospective ‘Economic Vulnerability Index’ (EVI) recently computed jointly by the United Nations and Guillaumont et al., (2011). We observe evidence that the impact of ‘EVI’ is non-linear with respect to the probability of these countries to engage into excessive indebtedness and that, this effect appears to be the same for the two monetary areas belonging to the CFA Franc Zone countries: a rise of EVI induces a higher probability of excessive debt and for higher EVI, this probability declines. Consequently, international development institutions such as the Bretton Woods should take into account such vulnerability in their assessment of the adequate development policies and recommendations to these countries.

Suggested Citation

  • Sena Kimm GNANGNON, 2012. "Structural Vulnerability and Excessive Public Indebtedness in CFA Franc Zone Countries," Working Papers 201237, CERDI.
  • Handle: RePEc:cdi:wpaper:1400
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    References listed on IDEAS

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    More about this item

    Keywords

    Structural Vulnerability; Public debt; unconditional logit model; linear probability model;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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