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Endogenous Optimal Currency Areas: the Case of the Central African Economic and Monetary Community

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  • Fabrizio Carmignani

Abstract

The Central African Economic and Monetary Community (CAEMC) has been a monetary union for several decades now. According to the hypothesis of endogenous optimal currency areas (OCAs), the degree of business cycle synchronisation across its member states should be significantly higher today than forty years ago. This paper examines cycle synchronisation along three different statistical dimensions and shows that (i) synchronisation has remained low throughout the period 1960--2007, but (ii) it has marginally increased over time. These findings have important implications for the design of the economic integration process in Africa. A chronology of business cycles in CAEMC countries is provided. Copyright 2010 The author 2009. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

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Bibliographic Info

Article provided by Centre for the Study of African Economies (CSAE) in its journal Journal of African Economies.

Volume (Year): 19 (2010)
Issue (Month): 1 (January)
Pages: 25-51

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Handle: RePEc:oup:jafrec:v:19:y:2010:i:1:p:25-51

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  1. Terence D.Agbeyegbe, 2003. "On the feasibility of a monetary union in the Southern Africa Development Community," Economics Working Paper Archive at Hunter College 306, Hunter College Department of Economics, revised 2003.
  2. Frankel, Jeffrey A & Rose, Andrew K, 1996. "The Endogeneity of the Optimum Currency Area Criteria," CEPR Discussion Papers 1473, C.E.P.R. Discussion Papers.
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  4. Andrew Rose, 2004. "A Meta-Analysis of the Effect of Common Currencies on International Trade," NBER Working Papers 10373, National Bureau of Economic Research, Inc.
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  6. Michael Artis & Massimiliano Marcellino & Tommaso Proietti, 2004. "Characterising the Business Cycle for Accession Countries," Econometrics 0403006, EconWPA.
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  8. Romain Houssa, 2004. "Monetary Union in West Africa and Asymmetric Shocks: A Dynamic Structural Factor Model Approach," Economics Series Working Papers WPS/2004-17, University of Oxford, Department of Economics.
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  10. Belke, Ansgar, 2007. "Endogenous Optimum Currency Areas and the Blend of Sectors – On the Determinants of Business Cycle Correlation across European Regions," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 26-49.
  11. Michael Artis & Massimiliano Marcellino & Tommaso Proietti, 2003. "Dating the Euro Area Business Cycle," Working Papers 237, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  12. Corsetti, Giancarlo & Pesenti, Paolo, 2002. "Self-Validating Optimum Currency Areas," CEPR Discussion Papers 3220, C.E.P.R. Discussion Papers.
  13. Georgios Karras, 2007. "Is Africa an Optimum Currency Area? A Comparison of Macroeconomic Costs and Benefits," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 16(2), pages 234-258, March.
  14. Rose, Andrew, 1999. "One Money, One Market: Estimating the Effect of Common Currencies on Trade," Seminar Papers 678, Stockholm University, Institute for International Economic Studies.
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  18. repec:ebl:ecbull:v:6:y:2008:i:12:p:1-10 is not listed on IDEAS
  19. Harding, Don & Pagan, Adrian, 2001. "Extracting, Using and Analysing Cyclical Information," MPRA Paper 15, University Library of Munich, Germany.
  20. Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375.
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