Risk sharing or coordination of fiscal policies

This paper addresses the thorny issue of economic stability in heterogeneous currency areas. The objective is to evaluate in the CEMAC zone the effectiveness of fiscal policy coordination and risk sharing. However the political and economic environment of the CEMAC is first presented followed by the identification of shocks affecting the zone. Then the theoretical evaluation of fiscal policy coordination reveals its effectiveness in the presence of heterogeneities. On the other hand empirical work and the economic precariousness of these countries demonstrate the inefficiency of this coordination based on the monitoring of the convergence criteria. As for risk sharing its effectiveness depends on the depth of the financial system. However in the CEMAC zone alternatives such as the foreign exchange reserve pool have demonstrated their effectiveness. It is recommended to rethink the coordination mode while accelerating the deepening of the financial system.