Title: Cyclicality of public investment in Africa

Authors: Abdoulaye Ouedraogo; Mehmet Serkan Tosun; Serdar Yilmaz

Addresses: Department of Economics, College of Business Administration, University of Nevada-Reno, Reno, Mail Stop 0030, Nevada 89557, USA ' Department of Economics, College of Business Administration, University of Nevada-Reno, Reno, Mail Stop 0030, Nevada 89557, USA ' Africa Region, The World Bank, 1818 H Street, NW, Washington D.C., 20433, USA

Abstract: In this paper we examine the cyclicality of public investment in African countries using panel data for the 1996-2012 period. In addition to an overall analysis of the African continent, we also examine public investment in country sub-groups such as the West African Economic and Monetary Union (WAEMU), the Economic Community of West African States (ECOWAS), the Economic Community of Central African States (EECAS), the Central African Economic and Monetary Community (CEMAC), the Intergovernmental Authority on Development in Eastern Africa (IGAD), and the South African Development Community (SADEC). We use contiguity and distance-based spatial weighting in analysing spatial spillovers from economic shocks on public investment spending. While our results confirm procyclicality in public investment, the degree of procyclicality varies significantly across the country groups. Procyclicality becomes less significant when spatial spillovers are considered for WAEMU, ECOWAS, CEMAC, and IGAD countries but it becomes stronger for ECCAS, and particularly SADEC countries.

Keywords: public investment; cyclicality; Africa; WAEMU; ECOWAS; EECAS; CEMAC; IGAD; SADEC; spatial spillovers; economic shocks; procyclicality; public policy.

DOI: 10.1504/IJPP.2016.079766

International Journal of Public Policy, 2016 Vol.12 No.3/4/5/6, pp.378 - 405

Received: 15 Jan 2016
Accepted: 26 Jul 2016
Published online: 13 Oct 2016 *

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