Forecasting Budgetary Cycles in the Member States of the West African Eco-nomic and Monetary Union (Waemu): A Markov Chainbased Approach

Abstract

Damien J. Agboton

This article models the various budgetary states of the eight WAEMU member countries using Markov Chains. A panel of 512 observations was constructed from the BCEAO database covering the period from 1960 to 2023. Our results highlight a dispersed convergence of states toward the budget deficit threshold imposed by the macroeconomic convergence criteria, identifying Mali, Senegal, and Benin as the top performers in the region in terms of effective deficit management. Furthermore, fiscal consolidation is necessary for Côte d’Ivoire, Guinea-Bissau, Burkina Faso, Togo, and Niger to stabilize their budget deficits in the long term and further stimulate economic growth.

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