Fiscal and Monetary Policy Coordination in African Emerging Markets: Macroeconomic Performance During Crisis Periods
Whilst there is consensus on the importance of monetary and fiscal policy in emerging market economies (EMEs), their impact on inflation, and growth dynamics during crisis periods is still not clear. This study examines the impact of fiscal and monetary policy on macroeconomic performance indicators (output gap, inflation, and real GDP growth), with a focus on the role of their coordination during crisis periods. The study uses fixed-effects models and annual data from 17 emerging market African economies for the period 1989 to 2023.
Empirical findings demonstrate that policy coordination significantly shapes macroeconomic outcomes, though effects vary by policy instrument and target variable. Fiscal-monetary coordination marginally improves the output gap, suggesting the importance of policy alignment to stabilize demand. High monetary policy rates coincide with fiscal deficits, high inflation and hence policy conflict. Whilst policy coordination can effectively manage short term demand, via the output gap, results show that it is less effective in influencing long-term supply-side growth. Public debt is negatively associated with both output gap and output growth, confirming the debt overhang hypothesis in emerging markets. Finally, results show that exchange rate appreciation is linked to lower inflation and smaller output gap, likely through imported disinflation. This study recommends that policy makers undertake synchronized, countercyclical policy frameworks and strengthen institutional capacity to deal with complex policy trade-offs during crisis periods.
Copyright© 2026 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.
Article’s History: Received 5th of March, 2026; Revised 14th of April, 2026; Accepted 12th of May, 2026; Available online: 30th of June, 2026. Published as research article in the Volume XXI, Summer, Issue 3(93), 2026.
Mbulawa, S., & Sekwati, L. (2026). Fiscal and Monetary Policy Coordination in African Emerging Markets: Macroeconomic Performance During Crisis Periods. Journal of Applied Economic Sciences, Volume XXI, Summer, 3(93), 699 – 718. https://doi.org/10.57017/jaes.v21.3(93).02
Acknowledgments/Funding: There was no funding received to support this study.
Conflict of Interest Statement: The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
Data Availability Statement: The data that support the findings of this study are openly available on websites for Central Banks, World Bank and International Monetary Fund.
Ethical Approval Statement: The authors confirm that this research was conducted in accordance with accepted ethical standards for academic research. The study relied solely on publicly available macroeconomic and financial datasets obtained from international organizations and official government sources. No human participants, personal data, surveys, interviews, or experimental procedures were involved. Therefore, formal ethical approval was not required for this study.
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