AFRICAN JOURNAL OF ECONOMICS AND FINANCIAL ISSUES

Public revenue is an important element of fiscal adjustment, even if its macroeconomic consequences are controversial. It is with this in mind that this research sets out to analyse the effect of fiscal adjustments based on increased government revenue on economic growth in the Franc Zone. To this end, panel data extracted from the BCEAO and BEAC database, the WDI and WGI for the 14 countries and covering the period 1995-2020 are used. Fiscal adjustment episodes are identified on the basis of the recent definition proposed by Afonso et al (2022), making it possible to count 135 episodes, 75 of which are based on increases in public revenue. Estimates are made using the generalised least squares method. The results indicate that fiscal adjustments through higher government revenues have a positive and significant impact on growth in the Franc Zone. The lesson to be drawn from these results is that one way of improving the budget balance and boosting economic growth in the Franc Zone would be to increase public revenue. In addition, for greater impact, this should be done in the presence of a stable political sphere and control of corruption.

Keywords: economic growth, government revenue, budget deficit, GLS, franc zone
JEL Classification: E60, H20, H62, O40