Natural Resources and Fiscal Policy in CEMAC: The Role of Institutional Quality ()
ABSTRACT
This article aims to analyze the effects of
institutional quality through natural resource rents on the orientation of
fiscal policy in the Central African Economic and Monetary Community (CEMAC).
The methodology adopted for this purpose is
based on panel data (over the 1996-2016 period) and the GMM system
estimator. The results show that natural resource rents are a means by which institutional quality affects the
orientation of fiscal policy. Indeed, economic and institutional
governance complements natural resource rents in the countercyclical
orientation of total public spending. Thus, there is an absence of the indirect
effects of institutional quality on the orientation of total public revenue behavior. Similarly, during natural
resource booms, the orientation of total public spending remains
countercyclical. Thus, political and institutional governance reinforces the
effects of natural resource booms on the countercyclical orientation of total
public spending. With regard to the decline in natural resource rents, total
public spending remains countercyclical. Only institutional governance
reinforces the effects of the decline in natural resource rents on the
countercyclical nature of total public spending. Thus, the procyclical
orientation of the behavior of total public revenue remains, regardless of whether there are periods of boom or
collapse in natural resource rents. Political governance amplifies the effects
of the decline in natural resource rents on the procyclical behavior of total
public revenue. These results lead to economic policy implications.
Share and Cite:
Kouika Bouanza, J. and Ngassa, T. (2021) Natural Resources and Fiscal Policy in CEMAC: The Role of Institutional Quality.
Theoretical Economics Letters,
11, 268-301. doi:
10.4236/tel.2021.112020.