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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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  • Dessus, Sebastien
  • Diaz Sanchez, Jose Luis
  • Varoudakis, Aristomene

Abstract

Evidence from a large panel of low-income and lower middle-income countries over the period 1995-2012 suggests that, contrary to other countries, public investment in the West African Economic and Monetary Union (WAEMU) 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 WAEMU countries justify exploring options for greater counter-cyclicality of rules-based fiscal frameworks and for risk-sharing.

Suggested Citation

  • Dessus, Sebastien & Diaz Sanchez, Jose Luis & Varoudakis, Aristomene, 2013. "Fiscal rules and the pro-cyclicality of public investment in the West African economic and monetary union," Policy Research Working Paper Series 6562, The World Bank.
    • Handle: RePEc:wbk:wbrwps:6562
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    1. Devarajan, Shantayanan, 1997. "Real Exchange Rate Misalignment in the CFA Zone," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 6(1), pages 35-53, March.
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    Cited by:

    1. Guerguil, Martine & Mandon, Pierre & Tapsoba, René, 2017. "Flexible fiscal rules and countercyclical fiscal policy," Journal of Macroeconomics, Elsevier, vol. 52(C), pages 189-220.
    2. repec:eee:ecmode:v:65:y:2017:i:c:p:138-146 is not listed on IDEAS

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    Keywords

    Public Sector Expenditure Policy; Debt Markets; Economic Stabilization; Fiscal Adjustment; Access to Finance;

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