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Is there a stochastic convergence process in the West African economic and monetary union in presence of multiple structural breaks from 1960 to 2010?

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  • Mohamed Siry Bah

    (GREDEG-CNRS/University of Nice Sophia Antipolis)

Abstract

Our study analyses stochastic convergence of relative real GDP per capita in the West African Economic and Monetary Union (WAEMU) in the period 1960 to 2010. It highlights the importance of considering structural breaks and cross-section dependence in the panel unit root tests. Using the panel stationarity test proposed by Carrion-I-Silvestre, Barrio-Castro and Lopez-Bazo (2005), we show that there was stochastic convergence in the WAEMU, by allowing for multiple level and slope shifts in the trend and for a general form of cross-sectional dependence. In other words, this result assumes that the effects of structural shocks occurring in the WAEMU zone disappeared over time and the series representing the logarithm of relative GDP per capita reverted towards their respective equilibriums. So, it encourages the objectives of WAEMU enlargement to other countries of West Africa as far as all countries could benefit from this process according to the predictions of the theory of endogeneity of optimum currency area.

Suggested Citation

  • Mohamed Siry Bah, 2014. "Is there a stochastic convergence process in the West African economic and monetary union in presence of multiple structural breaks from 1960 to 2010?," Economics Bulletin, AccessEcon, vol. 34(3), pages 1917-1928.
    • Handle: RePEc:ebl:ecbull:eb-14-00161
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    References listed on IDEAS

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    Cited by:

    1. Bah, Mohamed Siry, 2015. "Real convergence in West African Economic and Monetary Union (WAEMU)," Economics Letters, Elsevier, vol. 135(C), pages 19-23.

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    More about this item

    Keywords

    Panel stationarity test; Structural breaks; Bootstrap; Monte Carlo; Stochastic convergence; Franc Zone; WAEMU;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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