Role of Financial Stability in Synchronising Real and Financial Cycle in CEMAC
The issue of synchronisation of economic cycle face the difficulty of framing factors that affect the different phases of the cycle. This paper aim to highlight the role plays by financial stability in the synchronisation of financial and real cycles. The analysis is carried out by, measuring the impact of financial stability on the synchronisation of the different components of real and financial cycles. Using panel VAR models, impulse response functions based on Monte Carlo simulations were exploited to measure these effects. Data from the BEAC and COBAC databases for all CEMAC countries has covered the period 2000Q1-2020Q4. The results obtained from empirical analyses confirm the fact that financial stability plays an important role by synchronising the various factors associated to each cycles, real cycle and the financial cycle. The analysis of the impulse response functions has showed that, the financial stability index has a positive impact on the synchronisation of the financial and real cycles in the long run term. Based on these results, the main policy implication has been to encourage monetary authorities to strengthen the objective of financial stability in the CEMAC.
