Public Debt and Tax Revenues in the West African Economic and Monetary Union (WAEMU) Countries: The Role of Human Development
Public Debt and Tax Revenues in the West African Economic and Monetary Union (WAEMU) Countries: The Role of Human Development

Summary/Abstract: This study aims to examine the role of human development in the relationship between public debt and tax revenues in the West African Economic and Monetary Union. Using econometric models with the panel-corrected standard error (PCSE) method and the robust standard error method of Driscoll and Kraay to account for heteroskedasticity, autocorrelation, potential serial correlations and cross-sectional dependence on panel data covering the period 1995-2022, we analyze these complex links. Our results indicate that human development has a positive effect on government revenues. In addition, we find that rising public debt is a brake on tax revenue mobilization. Finally, our analysis suggests that the negative effect of public debt on revenues could be moderated in the context of human development. Our results suggest that human development policies have a positive effect on the public finances. To reinforce this dynamic, we recommend increasing investment in education and health, which are essential pillars of human development. These investments should be accompanied by reforms aimed at optimizing the allocation of public resources in these sectors. The use of public debt can be an effective tool for stimulating economic growth and increasing public revenues in the context of well-developed human development.

• Details
• Contents