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Public spending and the resource curse in WAEMU countries: An asymmetry analysis using the hidden cointegration and non-linear panel ARDL framework

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  • Sebri, Maamar
  • Issoufou Ahmed, Ousseini
  • Dachraoui, Hajer

Abstract

In this paper, we analyze the long-run effect of natural resource endowment on total public spending, public education spending, and public health spending in WAEMU member countries. After checking the cross-section dependence and unit root of the variables, this study uses the pooled mean group estimation technique within linear and non-linear panel ARDL models to investigate (a)symmetry effects in the relationship between variables. empirical results suggest that the resource curse hypothesis holds, meaning that natural resources adversely affect public spending. Across multiple specifications, our results support also the crowding-out effect and the institutional channel through which natural resources impact public spending. It seems therefore that the WAEMU countries still fail to transform the resource wealth advantage into favorable development outcomes. In light of the results, a few policy options are discussed in this paper.

Suggested Citation

  • Sebri, Maamar & Issoufou Ahmed, Ousseini & Dachraoui, Hajer, 2023. "Public spending and the resource curse in WAEMU countries: An asymmetry analysis using the hidden cointegration and non-linear panel ARDL framework," Resources Policy, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:jrpoli:v:82:y:2023:i:c:s0301420723003021
    DOI: 10.1016/j.resourpol.2023.103591
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