Bilateral Trade and Business Cycles Synchronization: African Monetary Integration Perspective
AbstractThe European Commission (1990) and Frankel and Rose (1997, 1998) pointed out that the traditional paradigm of Optimum Currency Areas is misleading because some consequences of monetary unions bring country-specific shocks closer together. Trade, for example, is not only a result of monetary union but it also increases business cycles synchronization. We test for the 53 African countries over the 1975-2004 period the hypothesis suggesting that monetary integration adds force to bilateral trade intensity which in turn, improves conditions for the practice of common monetary policy throughout business cycles synchronization. Our results support such argument and suggest some policy recommendations for African monetary integration.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 6 (2007)
Issue (Month): 25 ()
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Find related papers by JEL classification:
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
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