Impact of trade openness on the budget balance in WAEMU

The objective of this paper is to highlight the effect of trade openness on the fiscal balance in the case of WAEMU countries. To this end, a panel error correction model, namely the Pool Mean Group (PMG) estimator, was used. The results show that natural openness and openness policy have a positive long-term effect on the fiscal balance. This study shows that the conclusions drawn by Combes and Saadi-Sedik (2006) in their study, particularly with respect to the negative and significant effect of natural openness on the budget balance, are not verified in the case of WAEMU member countries.