Recessions and recoveries in Central African countries: Lessons from the past

Abstract

The Great Financial Crisis and the COVID-19 pandemic have raised concerns about business cycles. In this paper, we examine the dynamics of past business cycles in CAEMC economies to infer the shapes of recessions and subsequent recoveries. We use annual GDP data covering the period 1960-2020 and non-parametric approach. The main results are fourfold. First, recessions are, on average, long with a positive duration dependence relationship and the strength of recoveries is independent of the duration and the depth of the associated recessions. Second, recessions and recoveries are not all alike, meaning that history cannot be used as a guide for forecasting issue. Third, nearly 45% of the recessions and subsequent recoveries are V-shaped, and the L, U and W patterns appear when governments are heavily indebted. Fourth, a regional cycle sometimes emerges. The results suggest a strengthening of the capacities of CAEMC states and a resilient supply chain management.