Budgetary policy and Macroeconomic resilience in Morocco: Assessment and Impact

This study investigates the macroeconomic resilience of the Moroccan economy using a comprehensive analysis of key indicators and policy variables. Utilising data from sources such as the World Bank, we examined GDP per capita, government debt, government final expenditure, agriculture and industry sectors as a percentage of GDP, output gap, and trade openness. Applying the Autoregressive Distributed Lag (ARDL) method, we established both long-run and short-run relationships between these variables and the output gap, which represents the cyclical trend in the economy. Our findings revealed that both government final consumption in % of GDP and government debt in % of GDP have a significant impact on the economy as they were found to be countercyclical measures, mitigating the adverse effects of shocks on the economy. The ARDL model's diagnostic tests confirmed the validity of our estimations, ensuring robust and reliable results. Overall, this study sheds light on the budgetary determinants of macroeconomic resilience in the Moroccan economy and provides valuable insights for policymakers to implement measures that promote stability and sustainability. By carefully managing government expenditure and debt levels, the Moroccan economy can better navigate economic shocks and foster a more resilient and prosperous future.