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Journal of African Economies Advance Access originally published online on January 11, 2008
Journal of African Economies 2008 17(3):451-464; doi:10.1093/jae/ejm029
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© The author 2008. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org

Explaining Procyclical Fiscal Policy in African Countries{dagger}

John Thornton*

Fiscal Affairs Department, International Monetary Fund, Washington DC, USA

* Corresponding author: John Thornton, Fiscal Affairs Department, International Monetary Fund, 700 19th Street N.W., Washington DC 20431, USA. E-mail: jthornton{at}imf.org

Simple time series regressions for 37 low-income African countries during 1960–2004 suggest that government consumption is highly procyclical, with consumption responding more than proportionately to fluctuations in output in many cases. The results from a cross-country specification suggest that government consumption is more procyclical in those African countries that are more reliant on foreign aid inflows and that are less corrupt, and that it is less procyclical in countries with unequal income distribution and that are more democratic. These results contrast with those from recent research using data sets that comprise a more diverse groups of countries in terms of geography and income levels.

JEL classification: E62, H50, H60

{dagger} The views expressed in this paper are those of the author and should not be attributed to the International Monetary Fund.


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