Work

Determinants of Fiscal Discipline in West Africa: Does Democracy Matter?

Year: 2026

Type: article

Abstract: ABSTRACT This study investigates the impact of democracy on fiscal discipline in West Africa, focusing on four fiscal outcomes: overall balance, primary balance, the cyclically adjusted primary balance, and changes in the debt‐to‐GDP ratio. Using panel data for 14 countries and employing fixed effects, Driscoll–Kraay, and instrumental variable estimators, the analysis accounts for unobserved heterogeneity, cross‐sectional dependence, and endogeneity. The results show that democracy, on its own, does not exert a robust or consistent disciplining effect on fiscal outcomes. However, democratic institutions conditionally improve overall balances when embedded within credible fiscal rule frameworks, particularly for observed fiscal and primary balances. In contrast, democracy has little explanatory power for debt dynamics and structural fiscal effort once cyclical factors are removed. Debt adjustment is driven mainly by inherited debt levels, while resource‐rich countries exhibit faster debt accumulation. Overall, the findings suggest that in West Africa, democracy can enhance fiscal discipline, but its effectiveness depends on broader institutional credibility.

Source: African Development Review

DOI: 10.1111/1467-8268.70060

Author: Ozoemena Stanley Nwodo

Institution: University of South Africa

Language: English

Topic: Fiscal Policies and Political Economy

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $3,700