Macroeconomic policy space and African economies : an empirical sitting through reality and rhetoric

Abstract

African countries are faced with the challenge of reducing poverty rates by half on or before the year 2015. This calls for high and sustained economic growth rates. Scaling up of aid to create fiscal space is seen as one way of achieving the high growth rates. But fears have also been expressed that this cannot be realized within tight macroeconomic frameworks. This paper uses an approach of measuring the output gaps in selected African economies to argue whether the calls for macroeconomic policy space are justified or not.