Fiscal variables and growth convergence in the ECOWAS

Abstract

The purpose of this paper is to assess the relationship among fiscal variables (net lending, government expenditure and revenue) and economic growth in Sub-Saharan African countries. ... Government expenditure and revenue show pro-cyclical effects in West African Economic and Monetary Union (WAEMU) and ECOWAS countries, while fiscal balance has a pro-cyclical nature for WAEMU during the years 1999-2011. Moreover, a weak long-run relationship between government expenditure and revenue emerge, but only in the case of West African Monetary Zone (WAMZ) countries. Granger causality analysis showed mixed results for WAEMU countries, while for four out of six WAMZ countries (Gambia, Liberia, Nigeria, and Sierra Leone) the ?tax-and-spend? hypothesis holds, since government revenue would drive the expenditure. Finally, in the last three decades, cyclical component of economic growth has reduced its fluctuations, both for WAEMU and WAMZ member States.