Fiscal Rules and the Pro-Cyclicality of Public Investment in the West African Economic and Monetary Union

30 Pages Posted: 20 Apr 2016

See all articles by Sebastien Dessus

Sebastien Dessus

World Bank - West Bank and Gaza Resident Mission

Aristomene Varoudakis

World Bank

Date Written: August 1, 2013

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.

Keywords: Public Sector Expenditure Policy, Debt Markets, Economic Stabilization, Fiscal Adjustment, Access to Finance

Suggested Citation

Dessus, Sebastien and Varoudakis, Aristomene, Fiscal Rules and the Pro-Cyclicality of Public Investment in the West African Economic and Monetary Union (August 1, 2013). World Bank Policy Research Working Paper No. 6562. Available at SSRN: https://ssrn.com/abstract=2307808

Sebastien Dessus (Contact Author)

World Bank - West Bank and Gaza Resident Mission ( email )

P.O. BOX 54842
Jerusalem
Israel
+972 2 236 65 49 (Phone)
+972 2 236 65 43 (Fax)

Aristomene Varoudakis

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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