The Impact of Budgetary Policy on Economic Growth in Mali (The search of Non-linear Effect)

Abstract

Several studies have been conducted in recent years on the effectiveness of budgetary policy on economic growth. Many authors argue that a government's taxation and expenditure policies can change or even affect all economy. By cons, others argue that the economy is still in an overall equilibrium situation and subsequently budgetary policy would be ineffective or even detrimental to economic growth. This study aims to analyse empirically the impact of budgetary policy on economic growth in Mali. Particularly the search of nonlinear effect. Based on institutional benchmarks, a possible non-linear relationship appears. We have through the implementation of robust methods, found optimal thresholds of the deficit to 1% of the GDP and its external and internal financings respectively has 2.6% and -1.6% of the GDP. The study tries to assess the impact of budgetary policy on growth taking account of external public indebtedness stocks level. With an external debt threshold below 67% of GDP it appears that budgetary policy is Keynesian.

Keywords: Budgetary Policy, Deficit, Financings, Growth, Threshold Effects, Debt