Edmond Lankouande

Effectiveness of Burkina Faso's monetary and fiscal policies Edmond Lankouande

The research analyzes the relative effects of Burkina Faso's monetary and fiscal policies over three time horizons by assessing their endogeneity. It uses two models: the Error Correction Model and the Vector Autoregressive Model. Given the transition from WAMU to WAEMU and the econometric results indicating a break in 1994 (the year of the devaluation of the CFA franc), the study period 1970-2010 has been split into two: 1970-1993 and 1994-2010. The results show that monetary policy was more effective than fiscal policy over these three periods. From 1970 to 1993, fiscal policy was ineffective on economic growth. Over the period 1994-2010, the effects of monetary and fiscal policy were small and statistically insignificant. The devaluation and the adoption of the WAEMU Convergence Pact in 1999 did not contribute significantly to the country's economic growth. The results of the Granger causality analysis revealed that fiscal policy was endogenous over the three periods, while monetary policy was exogenous over the 1970-2010 and 1970-1993 periods.