The Cyclicality of Fiscal Policies in the CEMAC Region

By Gaston K Mpatswe, Sampawende J Tapsoba, Robert C York

August 1, 2011

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Gaston K Mpatswe, Sampawende J Tapsoba, and Robert C York. The Cyclicality of Fiscal Policies in the CEMAC Region, (USA: International Monetary Fund, 2011) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Expenditure, Financial sector policy and analysis, Fiscal policy, Fiscal stance, Procyclicality, Public investment spending

Keywords: CEMAC country, CEMAC fiscal policies country, CEMAC member country, CEMAC members Cameroon, CEMAC subregion, Countercyclical fiscal policy, Cyclicality coefficient, Fiscal procyclicality, Fiscal stance, Government spending, Monetary union, Multilateral surveillance, Oil-producing country, Procyclicality, Public investment spending, Sub-Saharan Africa, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/205
Stock No:

WPIEA2011205
ISBN:

9781463902162
ISSN:

1018-5941

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