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Fiscal Rules and Pro-cyclicality of the Fiscal Policy in CEMAC countries

BIKAI, J. Landry (2015): Fiscal Rules and Pro-cyclicality of the Fiscal Policy in CEMAC countries.

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The aim of this paper is to analyze the cyclicality of fiscal policy in the CEMAC zone and identify the link between this cyclicality effects and the multilateral supervision rules. Based on a non-dynamic panel data model inspired by Gali and Perotti (2003), and Cimadomo (2005), the results show that the fiscal policies applied in CEMAC zone are highly pro-cyclical. This pro-cyclicality is accentuated since the practice of multilateral supervision rules.Counter-cyclical fiscal policies appear as an alternative for the countries of this community to smooth out fluctuations in their business cycles and simultaneously reduce the probability of asymmetric shocks that seem harmful to the monetary policy.A review of the convergence criteria is therefore necessary since those used in CEMAC zone do not take into account the intrinsic characteristics of countries in the region.

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