Political Monetary Cycles and Independence of the Central Bank in a Monetary Union: An Empirical Test for a BEAC Franc Zone Member Country

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Periodical article

Title:	Political Monetary Cycles and Independence of the Central Bank in a Monetary Union: An Empirical Test for a BEAC Franc Zone Member Country
Author:	Magloire, Fouda Séraphin
Year:	1997
Periodical:	Journal of African Economies
Volume:	6
Issue:	1
Pages:	112-131
Language:	English
Geographic term:	Cameroon
Subjects:	central banks monetary policy Politics and Government Economics and Trade
External link:	https://jae.oxfordjournals.org/content/6/1/112.full.pdf
Abstract:	The idea that incumbent governments stimulate the economy close to election time in order to increase their chances of reelection is now well-rooted in economic theory. This paper focuses on the existence of political monetary cycles (PMC) in Cameroon, examining whether successive incumbents in this country over the last thirty years have influenced money growth in order to remain in power. In particular, it raises the question of the independence of the BEAC (Banque des États de l'Afrique centrale), the central bank of the monetary union to which Cameroon belongs. Dating techniques and econometric results attest to the existence of PMC of seven to eight months in Cameroon. These results imply that even in an autocracy, incumbent politicians need to manipulate economic variables in order to remain in power. In particular, manipulation of economic variables allows redistribution effects which keep social peace and increase the popularity of political incumbents at the domestic and international levels. Bibliogr., notes, ref., sum.