Cyclicality of Fiscal Policy in Sub-Saharan Africa : Magnitude and Evolution
This paper studies the cyclical aspects of fiscal policy in Sub-Saharan Africa countries during 1970–2014. It compares the cyclical properties of real government consumption in the region with those in other developing regions and high-income count...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/275241498141530465/Cyclicality-of-fiscal-policy-in-Sub-Saharan-Africa-magnitude-and-evolution http://hdl.handle.net/10986/27606 |
| Summary: | This paper studies the cyclical aspects
of fiscal policy in Sub-Saharan Africa countries during
1970–2014. It compares the cyclical properties of real
government consumption in the region with those in other
developing regions and high-income countries, and examines
whether there has been a change in the cyclical nature of
fiscal policy in recent years. The analysis finds that
government consumption is procyclical in Sub-Saharan African
countries, more so than in other regions, and that
accounting for endogeneity increases the degree of
cyclicality. The cyclical properties of government spending
vary along the business cycle, with the level of cyclicality
being larger when the level of real economic activity is
above the trend relative to when it is below the trend.
Mirroring the pattern in other developing regions, the
degree of cyclicality has changed since 2002 in Sub-Saharan
Africa, with incipient signs of a shift toward acyclical or
more countercyclical policies. The evidence does not suggest
that resource wealth or fragility increases the
procyclicality of government consumption in Sub-Saharan
Africa. Official development assistance is found to
exacerbate the procyclical stance of fiscal policy in the
region, but the result depends on the relative size of
foreign aid received. |
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