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Does ECOWAS make sense?

Author

Listed:
  • Banik, Nilanjan
  • Yoonus, C.A.

Abstract

This paper investigates empirically the possibility of forming an Optimum Currency Area (OCA) among member countries of Economic Community of West African States (ECOWAS) region. Under OCA, member countries share a common currency (like, the Euro), while foregoing their autonomy with respect to their use of monetary policy instruments. We say that the countries are good candidates for forming an OCA if there is a long run relationship in the trend (permanent) component of output. Our results indicate existence of long run relationship in the trend component of GDP among the member countries in the ECOWAS region. Hence is the plausibility for forming an OCA.

Suggested Citation

  • Banik, Nilanjan & Yoonus, C.A., 2011. "Does ECOWAS make sense?," MPRA Paper 38664, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:38664
    as

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    File URL: https://mpra.ub.uni-muenchen.de/38664/1/MPRA_paper_38664.pdf
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    References listed on IDEAS

    as
    1. World Bank, 2008. "World Development Indicators 2008," World Bank Publications - Books, The World Bank Group, number 11855, December.
    2. World Bank, 2009. "World Development Indicators 2009," World Bank Publications - Books, The World Bank Group, number 4367, December.
    3. Johansen, Soren & Juselius, Katarina, 1994. "Identification of the long-run and the short-run structure an application to the ISLM model," Journal of Econometrics, Elsevier, vol. 63(1), pages 7-36, July.
    4. Beveridge, Stephen & Nelson, Charles R., 1981. "A new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the `business cycle'," Journal of Monetary Economics, Elsevier, vol. 7(2), pages 151-174.
    5. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc.
    6. MacKinnon, James G, 1996. "Numerical Distribution Functions for Unit Root and Cointegration Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 601-618, Nov.-Dec..
    7. World Bank, 2008. "World Development Indicators 2008," World Bank Publications - Books, The World Bank Group, number 28241, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Monetary Union; ECOWAS; Beveridge-Nelson Decomposition;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration

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