Business and credit cycles in CAMEU economies

Abstract

We analyze potential interactions between the cyclic fluctuations in credit and activity in five countries of the Central Africa Monetary and Economic Union (CAMEU) economies. Cycles are extracted by using a pass-band filter, and then characterized over the period 1960-2008 according to the Bry and Boshan algorithm. Co-movements and concordance analysis establish that credit is procyclical in the CAMEU economies. Cointegration and causality tests specify interactions between the both cycles within countries. Indeed, in Chad credit cycle causes activity cycle; in Gabon and Congo, a feedback effect is observed; in Cameroon and CAR causality seems less obvious. Finally, our results reveal specificities in banks behavior towards financing of activity in CAMEU area.