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Commodity Shocks and External Currency Stability : An Empirical Evidence from CEMAC
[Chocs sur les produits de base et stabilité externe de la monnaie : une évidence empirique en CEMAC]

Author

Listed:
  • Fabien Clive Ntonga Efoua

    (FSEG - Faculté de Sciences Econonomiques et de Gestion - Yaoundé II - Université de Yaoundé II, CEDIMES - CEDIMES - Centre d'Etudes sur le Développement International et les Mouvements Economiques et Sociaux , ERMASMOP-Afrique - 'Equipe de recherche en marketing, stratégie et management des organisations publique-Afrique, CEREG - University of Yaoundé 2)

  • Etienne Inédit Blaise Tsomb Tsomb

    (FSEGA - Faculté des Sciences Economiques et de Gestion Appliquée de l'Université de Douala)

Abstract

The goal of this paper is to highlight the mechanisms through which shocks on commodities can affect the external stability of the CFA issued by the BEAC (apprehended through the External Coverage Rate of the currency - ECR). The choice of variables, namely: the ECR, the profits from the exploitation of natural resources on the one hand, the external public debt and inflation (control variables) on the other is made with reference to the literature, the financial history (crisis of the 1980s and financial turbulences of the years 2015-2019) and the current events (the Great Lockdown and the Russia-Ukraine war). The econometric strategy consists of a panel-VAR specification on which various diagnostic tests were applied (stationarity, number of lags, stability of the model and robustness). Our results show that shocks on commodities (including those on control variables) weaken the foreign exchange reserves dynamics in CEMAC. However, they do not compromise the credibility of the BEAC in the short term. Based on this, we make some policy recommendations.

Suggested Citation

  • Fabien Clive Ntonga Efoua & Etienne Inédit Blaise Tsomb Tsomb, 2023. "Commodity Shocks and External Currency Stability : An Empirical Evidence from CEMAC [Chocs sur les produits de base et stabilité externe de la monnaie : une évidence empirique en CEMAC]," Post-Print hal-04273963, HAL.
    • Handle: RePEc:hal:journl:hal-04273963
    Note: View the original document on HAL open archive server: https://hal.science/hal-04273963
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    References listed on IDEAS

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    More about this item

    Keywords

    Money external stability; Foreign exchange reserves; ECR; CEMAC; Panel-VAR; E5; G01; N1; N2; Stabilité extérieure de la monnaie; Réserves de change; TCE; panel-VAR; Money external stability Foreign exchange reserves ECR CEMAC Panel-VAR Classification JEL : C58 C23 E44 E5 G01 N1 N2; Panel-VAR Classification JEL : C58; C23; E44;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G01 - Financial Economics - - General - - - Financial Crises
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N2 - Economic History - - Financial Markets and Institutions
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G01 - Financial Economics - - General - - - Financial Crises
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N2 - Economic History - - Financial Markets and Institutions
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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