Abdellah Echaoui

Type of the article: Research Article

Abstract
This paper aims to investigate the short- and long-term relationships between fiscal deficit and economic growth in Morocco over the period 1985–2024. The ARDL bounds test approach is used to determine the existence of a cointegration relationship, while the error correction model (ECM) captures the short-run dynamics. The empirical results indicate that fiscal deficit exerts an immediate and significant negative effect on economic growth, suggesting that deficit financing may generate short-term macroeconomic pressures. However, the lagged effects of the fiscal deficit become positive and significant, reflecting a delayed expansionary impact of fiscal policy. In the long run, fiscal deficit has a negative and significant effect on economic growth, implying that persistent budget imbalances can hinder growth through debt accumulation and crowding-out effects. The bounds test confirms the existence of a stable cointegration relationship between the budget deficit and economic growth in Morocco. Furthermore, the negative and statistically significant error correction term indicates a relatively rapid adjustment towards long-term equilibrium following short-term shocks. These findings highlight the importance of prudent and sustainable fiscal management to support long-term economic growth in Morocco.

Type of the article: Research Article

Abstract
In emerging economies, the integration of environmental considerations into fiscal policy analysis has emerged as a priority of sustainable development strategies. This paper seeks to investigate the asymmetric short- and long-term impacts of the budget deficit on CO₂ emissions per capita in Morocco from 1974 to 2022. A nonlinear ARDL model is employed to identify asymmetric fiscal dynamics over the period under study. The estimation results indicate that, in the short run, an increase in the budget deficit immediately and significantly reduces CO₂ emissions per capita (−0.0046; p < 0.05), while the delayed effect of this increase significantly increases emissions in the following period (0.0068; p < 0.05), revealing opposing dynamics and instability in the short-term adjustment process. Conversely, the immediate and delayed effects of negative changes in the deficit do not exert statistically meaningful short-run effects (p > 0.10). In the long run, both increases and decreases in the budget deficit reduce emissions (−0.0075; p < 0.05; −0.0171; p < 0.01, respectively), with a stronger effect associated with deficit reductions. The results also show that urbanization significantly reduces emissions (–0.0168; p < 0.05), whereas fossil fuel consumption increases them (0.0003; p < 0.05). In contrast, GDP per capita, along with inward FDI inflows, fails to demonstrate statistical significance over the long-term horizon (p > 0.05). These results underscore the nonlinear and asymmetric nature of the fiscal policy and environmental quality nexus, suggesting that prudent budget management can promote sustainable environmental outcomes.