Effect of Deficit of budget balance on Private Investment in CEMAC?

Abstract This paper aims to determine the impact of the deficit of budget balance on private investment in CEMAC over the period 1984-2019. To this end, the PMG model and the regime-switching model were mobilized to check the linear or non-linear relationship that may exist between the variables involved. At the end of the PMG estimate, it appears that the negative and significant effects of the deficit of budget balance on private investment are not isolated, but depend heavily on its interaction with long-term domestic public debt. Given the non-linear nature of the relationship between deficit of budget balance and private investment, using Hansen's (1999) regime-switching model revealed that there are thresholds for which deficit of budget balance has positive and significant effects on private investment in each CEMAC country. By ricochet, maintaining a sustainable level, the private sector would become the real incubator of the development process in the states.