Alternative reconsideration of output growth differrential for the West African Monetary Zone
AbstractThis paper examines the determinants of output growth differentials from set convergence criteria in a panel of West African Monetary Zone (WAMZ) states. Drawing largely from micro-founded models, rooted in New Keynesian traditions, the study shows that widespread divergence of output growth rates of participating countries from ideal benchmarks calls to question the ability of independent monetary and exchange rates policy as instruments of national/regional macroeconomic stabilization, the preconditions for unionization. Using a stylized 5-country model of WAMZ area, the differences in national output growth/demand is analyzed in the light of country specific shocks or differences in the monetary transmission mechanisms. The main results show that business cycles (output shocks) stabilization around a desired target was not attained. Over the sample period, the un-weighted average regional GDP growth rates were very slow, vary widely among the countries and responded very poorly to independent monetary policy stance. The strong output growth rates divergence among these countries suggest a reconsideration of output convergence as pre-condition for unionization.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 13416.
Date of creation: 14 Feb 2009
Date of revision:
Growth rates differentials; Output convergence; exchange rate; WAMZ members; and panel data;
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-22 (All new papers)
- NEP-MAC-2009-02-22 (Macroeconomics)
- NEP-MON-2009-02-22 (Monetary Economics)
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