Economic Growth and Political Institutions in the WAEMU: What Do We Know?

Political institutions are recently pointed out as one of the important factors in the economic growth process. This article investigates in the West African Economic and Monetary Union (WAEMU) the direct and indirect economic growth effect of three political indicators: Political stability and absence of violence and terrorism, rule of law, and voice and accountability. The Dynamic Common Correlated Mean Group Estimator results show that investing in the rule of law increases economic growth in the WAEMU, while political stability and absence of violence and terrorism, and voice and accountability have no direct effect on economic growth in this zone. However, the indirect effect through physical and human capital results indicate that the political variables affect positively economic growth through human capital and negatively through physical capital. The final indirect economic growth effect are negative due to the dominant relative magnitudes effect of physical capital (negative) on the human capital effect (positive). Keywords: Economic Growth, Political Institution, Dynamic Common Correlated Estimato

The Main Determinants of Private Investments in the WAEMU Zone: The Dynamic Approach

AbstractThis article investigates the main determinants of private investment in the West African Economic and Monetary Union (WAEMU). After checking for unit root and co-integration, Error Correction Model is specified, and three estimators are performed: Dynamic Fixed-Effects, Mean Group, and Pooled Mean Group. Hausman tests show that the Dynamic Fixed-Effects Estimator is more efficient and consistent than others. Results suggest that, in the short-run, private investment in the WAEMU zone is determined by the aggregate demand conditions: gross domestic product and output gap, while, in the long-run, it is determined by gross domestic product, and political stability. The short-run elasticity of gross domestic product and output gap are statistically significant and average to 5.7 and 0.06, respectively. The long-run elasticity of gross domestic product and the semi-elasticity of political stability are statistically significant and average to 2.4 and -0.25, respectively. These finds imply that, to promote private investment in the WAEMU zone, there is a need among others for more proper design and implementation of aggregate demand management policies, and political framework stability. Key words: Private investment, WAEMU, Dynamic fixed-effects estimator.JEL: C33, E21, F15

EVALUATION DE L’ECART DE TVA AU TOGO

The mobilization of tax revenue continues to be a major challenge in Togo and the composition of this revenue reveals that the Value Added Tax (VAT) is its essential driver. However, there is a lack of targeted research or studies on the VAT gap. This paper evaluates and analyzes the difference between the VAT total tax liability and the amount of VAT actually collected through a top-down approach by distinguishing policy gap and compliance gap and identifying the sectors and branches of activity concerned. The results indicate that the VAT gap in Togo remains relatively large, although it has significantly improved in recent years to reach 45.9% of the amount of potential revenue (8.3% of GDP) in 2015, after 63.2% (11.4% of GDP) in 2007. Moreover, there is flexibility to improve VAT revenue through a more targeted tax administration for some branches, namely the products of extraction, wood, publishing and printing products, construction work, accommodation and food services, real estate and business services, and repair services

Le Policy mix de la zone UEMOA garantit-il la Stabilité Intérieure et la Croissance ?

A policy mix characterized by a monetary policy whose main objective is price stability and fiscal policy under fiscal discipline can he permit to keep prices and production levels of social optimum to sustain economic growth ? In this paper, an index of the policy mix is ​​built for grouping into a single indicator, the interactions of decisions of monetary and fiscal policy on monetary, financial and economic zone conditions. Then we mobilize recent methodological developments in particular, technical estimation models of spatial-dynamic panel that provide opportunities to consider the effects of neighborhood and unobserved heterogeneity of countries of the region to analyze the effects of Policy mix on inflation, the output gap and economic growth. The results provide empirical evidence that the articulation of monetary and fiscal policy in the current state, contributes to price stability without producing effects of overall macroeconomic stability to support economic growth in the long term . The paper argues for completing the current policy mix with two new instruments: an attenuation mechanism of propagation of shocks affecting the level of inflation and a mecanisme for output stabilization

Private Consumption in The WAEMU Zone: Does Interest Rates Matter?

This paper investigates the effect of interest rates on private consumption in the West African Economic and Monetary Union (WAEMU). After checking for unit root and co-integration, Error Correction Model is specified, three estimators are performed: Mean Group, Pooled Mean Group and Dynamic Fixed-Effects. Hausman tests indicate that the Dynamic Fixed-Effects estimator is more efficient and consistent than others. Results suggest that, there is no statistical evidence, both in short-run and long-run, impact of real and nominal saving interest rates on private consumption in the WAEMU region, from 2006 to 2014. These finds imply that, neither substitution effect, nor income effect, operate in this zone. However, the paper finds that, the growth of private consumption is strongly depends positively, in the long-run, on the gross national disposable income and the credit to private sector ratio. The long-run income elasticity and semi-elasticity of liquidity constraints are statistically significant and average to 0.92 and 0.0085, respectively. These finds imply that, there is a need for more proper financial market development and financial education policies implementation to have negative and significant impact of interest rates on private consumption in the WAEMU zone

Private Consumption in The WAEMU Zone: Does Interest Rate Matter?

This paper investigates the effect of interest rates on private consumption in the West African Economic and Monetary Union (WAEMU). After checking for unit root and co-integration, Error Correction Model is specified, and three estimators are performed: Mean Group, Pooled Mean Group and Dynamic Fixed-Effects. Hausman tests indicate that the Dynamic Fixed-Effects estimator is more efficient and consistent than others. Results suggest that there is no statistical evidence, both in short-run and long-run, impact of real and nominal saving interest rates on private consumption in the WAEMU region from 2006 to 2014. These finds imply that neither substitution effect, nor income effect, operate in this zone. However, the paper finds that the growth of private consumption is strongly depends positively in the long-run on the gross national disposable income and the credit to private sector ratio. The long-run income elasticity and semi-elasticity of liquidity constraints are statistically significant and average to 0.92 and 0.0085, respectively. These finds imply that there is a need for more proper financial market development and financial education policies implementation to have negative and significant impact of interest rates on private consumption in the WAEMU zone

Le Policy mix de la zone UEMOA garantit-il la Stabilité Intérieure et la Croissance ?

A policy mix characterized by a monetary policy whose main objective is price stability and fiscal policy under fiscal discipline can he permit to keep prices and production levels of social optimum to sustain economic growth ? In this paper, an index of the policy mix is ​​built for grouping into a single indicator, the interactions of decisions of monetary and fiscal policy on monetary, financial and economic zone conditions. Then we mobilize recent methodological developments in particular, technical estimation models of spatial-dynamic panel that provide opportunities to consider the effects of neighborhood and unobserved heterogeneity of countries of the region to analyze the effects of Policy mix on inflation, the output gap and economic growth. The results provide empirical evidence that the articulation of monetary and fiscal policy in the current state, contributes to price stability without producing effects of overall macroeconomic stability to support economic growth in the long term . The paper argues for completing the current policy mix with two new instruments: an attenuation mechanism of propagation of shocks affecting the level of inflation and a mecanisme for output stabilization

The Main Determinants of Private Investment in The WAEMU Zone: The Dynamic Approach

This article investigates the main determinants of private investment in the West African Economic and Monetary Union (WAEMU). After checking for unit root and co-integration, Error Correction Model is specified, and three estimators are performed: Dynamic Fixed-Effects, Mean Group, and Pooled Mean Group. Hausman tests show that the Dynamic Fixed-Effects Estimator is more efficient and consistent than others. Results suggest that, in the short-run, private investment in the WAEMU zone is determined by the aggregate demand conditions: gross domestic product and output gap, while, in the long-run, it is determined by gross domestic product, and political stability. The short-run elasticity of gross domestic product and output gap are statistically significant and average to 5.7 and 0.06, respectively. The long-run elasticity of gross domestic product and the semi-elasticity of political stability are statistically significant and average to 2.4 and -0.25, respectively. These finds imply that, to promote private investment in the WAEMU zone, there is a need among others for more proper design and implementation of aggregate demand management policies, and political framework stability

Nonlinear Effects of Inflation on Growth in the WAEMU

The monetary policy conducted by the Central Bank of West African States (BCEAO) faces many challenges, including the need to fight against inflation, which is driven mainly by the volatility of commodity prices on international markets. It is also fall to common criticisms about the lack of economic growth objective in her mandate as developing countries central bank in among the poorest in the world. It therefore not immune to reflection on the existence of a dilemma "inflation-growth" it would, consciously or unconsciously involved. The aim of this paper is to demonstrate the existence of a non-linear relationship between inflation and the economic growth within the West African Economic and Monetary Union (WAEMU) and to determine the inflation threshold at which a trade-off between inflation and growth is effective. From a threshold effects dynamic panel model, the study shows that the optimal level of inflation in the WAEMU zone is 8.08%. This result raises the question of the relevance of the standard deduction of 3% under the convergence criteria of the WAEMU zone. In addition, the inclusion of such a result is likely to help the BCEAO in the definition and conduct of monetary policy.Inflation; Croissance; Politique monétaire; Effets de seuil; Panel dynamique; UEMOA.

The impact of convergence, stability and growth pact on real convergence in the WAEMU

The nominal convergence knows regular monitoring and a growing interest in the WAEMU countries. However, few studies have examined the real convergence of the WAEMU countries and in particular the contribution of the convergence, stability and growth pact (PCSC) to the dynamics of the real convergence. This paper aims to analyze the effect of this pact on the dynamics of real convergence. After examining the concept of sigma-convergence and convergence in distribution, we use the beta-convergence approach with panel data to control for differences in the technologies state of countries. After bias correction of endogeneity problem by using the system GMM method, the results suggest that the hypothesis of conditional convergence can not be rejected and that the pact adopted by WAEMU countries triple the real convergence speed of approximation of real per capita GDP of member countries of the WAEMU during the period 1997-2008. Thus the adoption of the PCSC has improved the standard of life for WEAMU member countries.Pacte de convergence, de stabilité et de croissance; Convergence nominale ; Convergence réelle ; Différences de technologie ; Bêta-convergence ; Panel dynamique ; GMM.