A Politico-economic Model for Stabilisation in Africa

It is now widely accepted that stabilisation plans cannot be drawn up without taking potential political reactions into consideration. We develop a simple macroeconometric model, which describes interactions between economic and political variables, using data from 23 African countries for the 1980s. The results clearly suggest that there are important links between political and economic spheres. Economic policies affect the political situation and socio-political reactions influence economic activity and feedback to economic policies. We conclude that incorporating sociopolitical reactions in the design of economic policies can help establish more efficient stabilisation programmes.