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Exiting from Fragility in Sub‐Saharan Africa: The Role of Fiscal Policies and Fiscal Institutions
Author(s) -
Deléchat Corinne,
Fuli Ejona,
Mulaj Dafina,
Ramirez Gustavo,
Xu Rui
Publication year - 2018
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12195
Subject(s) - endogeneity , fiscal space , fragility , fiscal policy , economics , tax revenue , causality (physics) , revenue , fiscal capacity , resilience (materials science) , psychological resilience , estimation , sample (material) , economic policy , public expenditure , public finance , development economics , macroeconomics , finance , political science , econometrics , chemistry , physics , management , quantum mechanics , psychotherapist , chromatography , thermodynamics , law , psychology
This paper studies the role of fiscal policies and institutions in building resilience in sub‐Saharan African countries, focussing on 26 countries that were deemed fragile in the 1990s. We use a probabilistic framework together with GMM estimation to address endogeneity and reverse causality. We find that fiscal institutions and fiscal space, namely the capacity to raise tax revenue and contain current spending, as well as the quality of public expenditure, are significantly and robustly associated with building resilience. Similar conclusions arise from a qualitative study of 7 sub‐Saharan African countries in the sample that built resilience since the 1990s.