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Structural vulnerability and excessive public indebtedness in CFA Franc Zone countries

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  • Gnangnon, Sèna Kimm

Abstract

This paper relies on the ‘institutional debt rule’ implemented in Franc Zone countries to assess whether the structural vulnerability of these countries matter for their probability to enter into excessive indebtedness. This structural vulnerability is measured by retrospective ‘Economic Vulnerability Index’ (EVI) recently computed jointly by the United Nations and Guillaumont and Cariolle (2011). We observe evidence that the impact of ‘EVI’ is non-linear with respect to the probability of these countries to engage into excessive indebtedness and that, this effect appears to be the same for the two monetary areas belonging to the CFA Franc Zone countries: a rise of EVI induces a higher probability of excessive debt and for higher EVI, this probability declines. Consequently, international community and more particularly international development institutions such as the Bretton Woods should take into account such vulnerability in their assessment of the adequate development policies and recommendations to these countries.

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  • Gnangnon, Sèna Kimm, 2013. "Structural vulnerability and excessive public indebtedness in CFA Franc Zone countries," Economic Modelling, Elsevier, vol. 35(C), pages 816-832.
    • Handle: RePEc:eee:ecmode:v:35:y:2013:i:c:p:816-832
    DOI: 10.1016/j.econmod.2013.08.022
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    Cited by:

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    5. Sèna Kimm Gnangnon & Harish Iyer, 2017. "Structural Economic Vulnerability, Trade Policy and FDI Inflows," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-35, February.

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    More about this item

    Keywords

    Structural vulnerability; Public debt; Unconditional logit model; Linear probability model;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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