Discretionary fiscal deficit: The case of Mauritius

This paper seeks to provide additional evidence on the discretionary aspects of public sector spending and taxing policies in Mauritius. A game theoretic model is developed to analyse whether budgetary imbalances have been used as a tool for policy making or have they been just accounting imbalances resulting from the governments persuasion in its allocation and distribution objectives. Indeed, data for the period 1973-96 are used to estimate the model. Empirical findings confirm that there was lack of discretionary move towards stabilisation and the implementation of the budget as a policy variable. Also, characteristic roots computed from the reaction functions reveal the erratic behaviour of private spending. Besides, it was not surprising to find out that no co-integrating or long-run relationship exists between public and private aggregate spending. This paper can have great implications in future because continuous budgetary imbalances can make fiscal policy, and hence the economy as a whole, more destabilising Keywords: Fiscal policy, private agents, national budget and deficit

Perceptions of climate change, multiple stressors and livelihoods on marginal African coasts

Studies of multiple stressors in Africa often focus on vulnerable inland communities. Rising concentrations of the world’s poor live in coastal rural–urban areas with direct dependencies on marine as well as terrestrial ecosystem goods and services. Using participatory methods we elicited perceptions of stressors and their sources, impacts and consequences held by coastal communities in eastern Africa (Mtwara in Tanzania and Maputo in Mozambique). Respondent-informed timelines suggest wars, economic policies and natural increase have led to natural resource-dependent populations in marginal, previously little-inhabited lowland coastal areas. Respondents (n = 91) in interviews and focus groups rank climate stressors (temperature rise/erratic rain) highest amongst human/natural stressors having negative impacts on livelihoods and wellbeing (e.g., cross-scale cost of living increases including food and fuel prices). Sources of stress and impacts were mixed in time and space, complicating objective identification of causal chains. Some appeared to be specific to coastal areas. Respondents reported farms failing and rising dependence on stressed marine resources, food and fuel prices and related dependence on traders and credit shrunk by negative global market trends. Development in the guise of tourism and conservation projects limited access to land–sea livelihoods and resources in rural–urban areas (coastal squeeze). Mental modelling clarified resource user perceptions of complex linkages from local to international levels. We underline risks of the poor in marginal coastal areas facing double or multiple exposures to multiple stressors, with climate variability suggesting the risks of climate change

Democracy and economic growth in Sub-Saharan Africa: A panel data approach

This paper studies the link between democracy and economic development for 28 countries of Sub-Saharan Africa for the period 1980-2005 in a panel data framework. A democracy index constructed from the Freedom House indices. A variety of panel data unit root and cointegration tests are applied. The variables are found to be integrated of order one and cointegrated. The Blundell-Bond system generalized methods-of-moments is employed to conduct a panel error-correction mechanism based causality test within a vector autoregressive structure. Economic growth is found to cause democracy in the short-run, while bidirectionality is uncovered in the long-run. In addition, the long-run coefficients are estimated through the panel fully modified ordinary least squares and dynamic ordinary least squares methods. Democracy has a positive impact on GDP and vice versa. These results lend support to the virtuous cycle hypothesis. © 2012 Springer-Verlag