Estimation of the Equilibrium Interest Rate: Case of CFA zone

Problem Statement The framework of this study is consisted of the countries of zone CFA and in fact the two central banks (BCEAO and BEAC) in charge of the monetary policy implementation. There was a great resurgence of interest these last years on the question in the way of leading the monetary policy. One of the indicators of this phenomenon is the enormous volume of recent papers and the conferences prepared on this subject. In addition, much of macro economists proposed specific rules of policy or ruled on the way in which the monetary policy should be led. The principal objective of this study is the evaluation of the macroeconomic gold rule in the CFA countries which stipulates that in an economy with equilibrium growth and under simplifying macroeconomic assumptions: the neutral interest rate is equal to the potential growth rate of the economy. Research Method To achieve this objective we try to determine the weight of the goals of monetary and fiscal policies attaches with a quadratic reaction function which takes into account a target of inflation, public expenditure and interest rate. And then the methodology of determination of the neutral interest rate is derived from a generalized Taylor rule. The estimation of the parameters is based on panel data econometrics, the generalized method of moments and the Kalman filter. These different methods are used to emphasize the robustness of the results of our analysis. Results and conclusion The estimates carried out on the panel data emphasize a neutral interest rate in the interval of 1.4% to 1.6%. It is generally noticed that the estimates made on the panel data are compatible with those carried out by using the Kalman filter. In addition, it is observed that, overall the level of the natural interest rate in UEMOA zone (1.51) is lower than CEMAC zone (1.65). The most important neutral rate is observed in the Malian economy and the lowest in the Burkina economy. But we notice a larger homogeneity in CEMAC zone (standard deviation of 0.12) than UEMOA zone ( standard deviation of 0.29).Taylor Rule; equilibrium interest rate; Kalman filter

Multi country model in CFA zone

La disponibilité d’un modèle de simulation est d’un grand secours pour le décideur public car un tel outil remplit des fonctions aussi importantes que celles de support à la définition des programmes économiques et financiers, d’instrument de dialogue avec les partenaires au développement, de monitoring des politiques économiques et sociales. Dans cette étude, l’accent est mis sur la mise en place d’un modèle multi pays, qui prend en compte les spécificités de l’Etat, et celles de la banque centrale. Le but principal étant de mettre en évidence les interactions entre les politiques budgétaires et monétaires.VAR; SVAR; Kalman Filter; MCM

Modèle multi pays dans les pays de la zone franc

La disponibilité d’un modèle de simulation est d’un grand secours pour le décideur public car un tel outil remplit des fonctions aussi importantes que celles de support à la définition des programmes économiques et financiers, d’instrument de dialogue avec les partenaires au développement, de monitoring des politiques économiques et sociales. Dans cette étude, l’accent est mis sur la mise en place d’un modèle multi pays, qui prend en compte les spécificités de l’Etat, et celles de la banque centrale. Le but principal étant de mettre en évidence les interactions entre les politiques budgétaires et monétaires

Modèle multi pays dans les pays de la zone franc

La disponibilité d’un modèle de simulation est d’un grand secours pour le décideur public car un tel outil remplit des fonctions aussi importantes que celles de support à la définition des programmes économiques et financiers, d’instrument de dialogue avec les partenaires au développement, de monitoring des politiques économiques et sociales. Dans cette étude, l’accent est mis sur la mise en place d’un modèle multi pays, qui prend en compte les spécificités de l’Etat, et celles de la banque centrale. Le but principal étant de mettre en évidence les interactions entre les politiques budgétaires et monétaires

Estimation of the Equilibrium Interest Rate: Case of CFA zone

Problem Statement The framework of this study is consisted of the countries of zone CFA and in fact the two central banks (BCEAO and BEAC) in charge of the monetary policy implementation. There was a great resurgence of interest these last years on the question in the way of leading the monetary policy. One of the indicators of this phenomenon is the enormous volume of recent papers and the conferences prepared on this subject. In addition, much of macro economists proposed specific rules of policy or ruled on the way in which the monetary policy should be led. The principal objective of this study is the evaluation of the macroeconomic gold rule in the CFA countries which stipulates that in an economy with equilibrium growth and under simplifying macroeconomic assumptions: the neutral interest rate is equal to the potential growth rate of the economy. Research Method To achieve this objective we try to determine the weight of the goals of monetary and fiscal policies attaches with a quadratic reaction function which takes into account a target of inflation, public expenditure and interest rate. And then the methodology of determination of the neutral interest rate is derived from a generalized Taylor rule. The estimation of the parameters is based on panel data econometrics, the generalized method of moments and the Kalman filter. These different methods are used to emphasize the robustness of the results of our analysis. Results and conclusion The estimates carried out on the panel data emphasize a neutral interest rate in the interval of 1.4% to 1.6%. It is generally noticed that the estimates made on the panel data are compatible with those carried out by using the Kalman filter. In addition, it is observed that, overall the level of the natural interest rate in UEMOA zone (1.51) is lower than CEMAC zone (1.65). The most important neutral rate is observed in the Malian economy and the lowest in the Burkina economy. But we notice a larger homogeneity in CEMAC zone (standard deviation of 0.12) than UEMOA zone ( standard deviation of 0.29)

Socioeconomic Status and Fertility Decline in Burkina Faso, 2003-2015

The paper proposes to clarify whether fertility decline in Burkina Faso between 2003 and 2015 is explained by the differential distributions (composition effect and response effect) with focus on socioeconomic status (women’s education, women’s occupation and poverty). Using data from 2003 demographic and health survey (DHS) and 2015 demographic and health module of the Multisectoral Continuous Survey, we applied an extension of Blinder-Oaxaca decomposition approach to quantify the percentage of fertility decline attributable to distribution of the socio-economic status (composition effect) and the percentage attributable to women’s fertility behavior (response effect) attributable to socio-economic status. We find the fertility decline is mainly explain to changes in the distribution of women according the different factors. Indeed, the composition effect represents 88% and only 12% for the response effect.  Moreover, composition effect for socio-economic factors is estimated to 85.13% and the response effect is estimated to 34.23%. These results suggest (i) to encourage girl’s education by enrolling them in school but particularly by ensuring that they go at least to secondary school; (ii) create a minimum package of services for the promotion of modern methods of contraception, particularly for women working in agriculture and trade sector as well as those from poor households and living in rural areas; (iii) promote domestic work to allow more women to be interested

Impact du Commerce bilatéral Intra-Zone dans la zone UEMOA et CEMAC: Approche par les VAR Structurels

ABSTRACT In this article, we empirically try to answer the second hypothesis on the theory of the ZMO developed by Mc Kinnon (1963), while working on a sample of the countries of the franc zone. We found on the assets of the gravity models to put in evidence the existing monetary union impact on the bilateral trade flux. In order to measure the effects of the monetary union on the intra zone trade, we call on, a structural VAR, to which is associated the method of space state model assessment with the aim of distinguishing the impact of an economic policy shock in a group of country in open economy. Our sample is constituted in this particular case of the 12 countries of the zone franc; seven countries of the UEMOA zone and five countries of the CEMAC zone. The originality of the approach is based on the fact that we tempt an endogeneisation of the flux of bilateral trade of every country in this analysis. The results of our investigations show a sensitive reduction of the effects borders, an improvement of the institutional effects as well as the effects bound to the distance on the flux of the intra zone trade. On the other hand, the survey by structural VAR and state measure models shows a relative symmetry of shocks observed in the real shocks of demand while the shocks of price and supply rather present an asymmetric character. With the importance of the real demand shocks, in our study we globally notice that some efforts must be made to vary the structure of the economy of the franc countries, currently based on the food-processing industries, which are very sensitive to the climatic risks; in order to hope to have the sustained growth rates which will allow to reach the objectives of poverty reduction by 2015

Impact du Commerce bilatéral Intra-Zone dans la zone UEMOA et CEMAC: Approche par les VAR Structurels

ABSTRACT In this article, we empirically try to answer the second hypothesis on the theory of the ZMO developed by Mc Kinnon (1963), while working on a sample of the countries of the franc zone. We found on the assets of the gravity models to put in evidence the existing monetary union impact on the bilateral trade flux. In order to measure the effects of the monetary union on the intra zone trade, we call on, a structural VAR, to which is associated the method of space state model assessment with the aim of distinguishing the impact of an economic policy shock in a group of country in open economy. Our sample is constituted in this particular case of the 12 countries of the zone franc; seven countries of the UEMOA zone and five countries of the CEMAC zone. The originality of the approach is based on the fact that we tempt an endogeneisation of the flux of bilateral trade of every country in this analysis. The results of our investigations show a sensitive reduction of the effects borders, an improvement of the institutional effects as well as the effects bound to the distance on the flux of the intra zone trade. On the other hand, the survey by structural VAR and state measure models shows a relative symmetry of shocks observed in the real shocks of demand while the shocks of price and supply rather present an asymmetric character. With the importance of the real demand shocks, in our study we globally notice that some efforts must be made to vary the structure of the economy of the franc countries, currently based on the food-processing industries, which are very sensitive to the climatic risks; in order to hope to have the sustained growth rates which will allow to reach the objectives of poverty reduction by 2015