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Les Effets Non Lineaires Des Deficits Budgetaires Sur L´Activite Economique En Cemac
[Threshold Effects of Budgetary Policy on Economic Growth in Cemac]

  • Bikai, Landry

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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24524.

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Date of creation: 19 Aug 2010
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Handle: RePEc:pra:mprapa:24524
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  1. Alberto Alesina & Roberto Perotti, 1995. "Fiscal Expansions and Fiscal Adjustments in OECD Countries," NBER Working Papers 5214, National Bureau of Economic Research, Inc.
  2. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-70, November.
  3. Bertola, Giuseppe & Drazen, Allan, 1991. "Trigger Points and Budget Cuts: Explaining the Effects of Fiscal Austerity," CEPR Discussion Papers 599, C.E.P.R. Discussion Papers.
  4. Gilbert Colletaz & Christophe Hurlin, 2006. "Threshold Effects in the Public Capital Productivity: An International Panel Smooth Transition Approach," Post-Print halshs-00257390, HAL.
  5. González, Andrés & Teräsvirta, Timo & van Dijk, Dick, 2005. "Panel Smooth Transition Regression Models," SSE/EFI Working Paper Series in Economics and Finance 604, Stockholm School of Economics.
  6. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
  7. Bruce E. Hansen, 1997. "Threshold effects in non-dynamic panels: Estimation, testing and inference," Boston College Working Papers in Economics 365, Boston College Department of Economics.
  8. Sutherland, Alan, 1997. "Fiscal crises and aggregate demand: can high public debt reverse the effects of fiscal policy?," Journal of Public Economics, Elsevier, vol. 65(2), pages 147-162, August.
  9. Schclarek, Alfredo, 2003. "Fiscal Policy and Private Consumption in Industrial and Developing Countries," Working Papers 2003:20, Lund University, Department of Economics, revised 30 Sep 2005.
  10. Gabriele Giudice & Alessandro Turrini & Jan in 't Veld, 2003. "Can fiscal consolidations be expansionary in the EU? Ex-post evidence and ex-ante analysis," European Economy - Economic Papers 195, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  11. Olivier Jean Blanchard, 1990. "Suggestions for a New Set of Fiscal Indicators," OECD Economics Department Working Papers 79, OECD Publishing.
  12. Rzonca, Andrzej & Cizkowicz, Piotr, 2005. "Non-Keynesian effects of fiscal contraction in new member states," Working Paper Series 0519, European Central Bank.
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