Explaining Procyclical Fiscal Policy in African Countries

Posted: 30 Jun 2008

See all articles by John Thornton

John Thornton

International Monetary Fund (IMF)

Date Written: June 2008

Abstract

Simple time series regressions for 37 low-income African countries during 1960-2004 suggest that government consumption is highly procyclical, with consumption responding more than proportionately to fluctuations in output in many cases. The results from a cross-country specification suggest that government consumption is more procyclical in those African countries that are more reliant on foreign aid inflows and that are less corrupt, and that it is less procyclical in countries with unequal income distribution and that are more democratic. These results contrast with those from recent research using data sets that comprise a more diverse groups of countries in terms of geography and income levels.

Keywords: E62, H50, H60

Suggested Citation

Thornton, John, Explaining Procyclical Fiscal Policy in African Countries (June 2008). Journal of African Economies, Vol. 17, Issue 3, pp. 451-464, 2008. Available at SSRN: https://ssrn.com/abstract=1153300 or http://dx.doi.org/ejm029

John Thornton (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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