Is the Franc Zone an Optimal Currency Area?
AbstractIn this paper we modify the method of Blanchard and Quah (1989) in order to estimate a structural VAR model appropriate for a small open economy. In this way we identify shocks to output and prices in the members of the two monetary unions that make up the African CFA Franc Zone. The costs of monetary union membership will depend on the extent to which price and output shocks are correlated across countries, and the degree of similarity in the long run effects of the shocks on the macro-economy. The policy conclusions depend on the relative importance of different macroeconomic variables to policymakers, and the speed with which a policymaker is able to respond to a shock.
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Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 00/1.
Date of creation: Jan 2000
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Other versions of this item:
- David Fielding, 1999. "Is the Franc Zone an Optimal Currency Area?," Economics Series Working Papers WPS/2000-03, University of Oxford, Department of Economics.
- David Fielding & Kalvinder Shields, 2000. "Is the Franc Zone an Optimal Currency Area?," CSAE Working Paper Series 2000-03, Centre for the Study of African Economies, University of Oxford.
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-01-31 (All new papers)
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- Coleman, Simeon, 2010.
"Inflation persistence in the Franc zone: Evidence from disaggregated prices,"
Journal of Macroeconomics,
Elsevier, vol. 32(1), pages 426-442, March.
- Simeon Coleman, 2008. "Inflation persistence in the Franc Zone: evidence from disaggregated prices," Working Papers 2008/16, Nottingham Trent University, Nottingham Business School, Economics Division.
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