Cote d'Ivoire - Fiscal policy with fixed nominal exchange rates

Cote d'Ivoire represents an ideal opportunity for a case study of the effects of fiscal policy in a developing country with a fixed exchange rate. For the last 15 years, the growth of the Ivorian economy has been dramatically affected by both exogenous factors and the responses of fiscal policy. After a commodity boom in 1976-77, expansionary fiscal policies increased the price of nontradable goods relative to tradable goods. Government deficits induced large external deficits. The authors analyze the structure of government spending and revenues to investigate whether there is a relationship between the large government deficits and the Ivorian economy's poor performance during the 1980s. They also examine what factors determine the real exchange rate and the external balance.