On the Adequacy of Monetary Arrangements in Sub-Saharan Africa

25 Pages Posted: 23 Mar 2005

See all articles by Agnès Bénassy-Quéré

Agnès Bénassy-Quéré

Paris School of Economics (University Paris 1)

Maylis Coupet

Ecole Normale Superieure de Cachan; ENSAE

Abstract

We examine the economic rationale for monetary union(s) in Sub-Saharan Africa through the use of cluster analysis on a sample of 17 countries. The variables used stem from the theory of optimum currency areas and from the fear-of-floating literature. It is found that the existing CFA franc zone cannot be viewed as an optimum currency area: CEMAC and UEMOA countries do not belong to the same clusters, and a 'core' of the UEMOA can be defined on economic grounds. The results support the inclusion of the Gambia, Ghana and Sierra Leone in an extended UEMOA arrangement, or the creation of a separate monetary union with the 'core' of the UEMOA and the Gambia, rather than the creation of a monetary union around Nigeria. Finally, the creation of the West African Monetary Zone (WAMZ) around Nigeria is not supported by the data.

Suggested Citation

Benassy-Quere, Agnes and Coupet, Maylis, On the Adequacy of Monetary Arrangements in Sub-Saharan Africa. Available at SSRN: https://ssrn.com/abstract=685177

Agnes Benassy-Quere (Contact Author)

Paris School of Economics (University Paris 1) ( email )

106-112 boulevard de l'Hopital
Paris, F-75013
France
+33 1 44 07 82 19 (Phone)

HOME PAGE: http://www.parisschoolofeconomics.com/benassy-quere-agnes/agnesb.html

Maylis Coupet

Ecole Normale Superieure de Cachan ( email )

61 avenue du President Wilson
Cachan
France

ENSAE

92245 Malakoff Cedex
France

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