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Welfare Effects of Monetary Integration

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Author Info

  • Tamon Asonuma
  • Xavier Debrun
  • Paul R. Masson

Abstract

This paper proposes a quantitative assessment of the welfare effects arising from the Common Monetary Area (CMA) and an array of broader grouping among Southern African Development Community (SADC) countries. Model simulations suggest that (i) participating in the CMA benefits all members; (ii) joining the CMA individually is beneficial for all SADC members except Angola, Mauritius and Tanzania; (iii) creating a symmetric CMA-wide monetary union with a regional central bank carries some costs in terms of foregone anti-inflationary credibility; and (iv) SADC-wide symmetric monetary union continues to be beneficial for all except Mauritius, although the gains for existing CMA members are likely to be limited.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/136.

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Length: 33
Date of creation: 01 May 2012
Date of revision:
Handle: RePEc:imf:imfwpa:12/136

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Related research

Keywords: Economic indicators; Southern African Development Community; Welfare; monetary policy; inflation; central bank; monetary union; monetary area; inflation tax; monetary fund; monetary unification; monetary integration; monetary unions; terms of trade; foreign exchange; inflation rates; monetary autonomy; inflation rate; macroeconomic stability; local currencies; low inflation; money market; price stability; monetary policy autonomy; monetary regimes; terms of trade shock; lower inflation; rand monetary area; monetary stance; monetary financing; monetary authority; monetary arrangement; inflation-targeting; european monetary union; monetary regime; rates of inflation; international monetary arrangements; monetary coordination; inflation targeting framework; inflation targeting; independent central bank; terms of trade shocks; discount rates; national monetary policy; inflationary impact; nominal interest rates; monetary policies; inflationary pressures; money markets; monetary agreement; monetary arrangements; monetary community;

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  1. Cobham, David & Robson, Peter, 1994. "Monetary integration in Africa: A deliberately European perspective," World Development, Elsevier, vol. 22(3), pages 285-299, March.
  2. Mongelli, Francesco Paolo, 2002. "├ČNew" Views on the Optimum Currency Area Theory: What is EMU Telling US?," Royal Economic Society Annual Conference 2002 140, Royal Economic Society.
  3. Alberto Alesina & Robert Barro & Silvana Tenreyro, 2002. "Optimal Currency Areas," Harvard Institute of Economic Research Working Papers 1958, Harvard - Institute of Economic Research.
    • Alberto Alesina & Robert J. Barro & Silvana Tenreyro, 2003. "Optimal Currency Areas," NBER Chapters, in: NBER Macroeconomics Annual 2002, Volume 17, pages 301-356 National Bureau of Economic Research, Inc.
  4. Debrun, Xavier, 2001. "Bargaining over EMU vs. EMS: Why Might the ECB Be the Twin Sister of the Bundesbank?," Economic Journal, Royal Economic Society, vol. 111(473), pages 566-90, July.
  5. Axel Boersch-Supan, 1999. "Incentive Effects of Social Security Under an Uncertain Disability Option," NBER Working Papers 7339, National Bureau of Economic Research, Inc.
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