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Fiscal Reform and Monetary Union in West Africa

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  • Hefeker, Carsten

Abstract

The paper explores the interaction between the proposed monetary union for ECOWAS and structural reforms of fiscal policy. The effects depend to a large extent on the degree of similarity of member countries. In a monetary union of similar countries, member states run a more distortive fiscal policy, while their structural reform efforts will fall. This is also the case for countries that unilaterally peg to an anchor currency or introduce a foreign currency. In an monetary union with dissimilar countries the reverse can happen for those member states that are confronted with high distortion countries. This result implies that current WAEMU members will run a less distortive fiscal policy after the inclusion of other members of ECOWAS. --

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Bibliographic Info

Paper provided by Hamburg Institute of International Economics (HWWA) in its series HWWA Discussion Papers with number 224.

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Date of creation: 2003
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Handle: RePEc:zbw:hwwadp:26257

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Keywords: West Africa; monetary union; fiscal policy; structural reforms;

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  1. Roel M.W.J. Beetsma & Henrik Jensen, . "Structural Convergence under Reversible and Irreversible Monetary Unification," EPRU Working Paper Series 99-06, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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  8. Clausen, Volker & Wohltmann, Hans-Werner, 2005. "Monetary and Fiscal Policy in a Large Asymmetric Monetary Union - A Dynamic Three-Country Analysis," Economics Working Papers 2005,18, Christian-Albrechts-University of Kiel, Department of Economics.
  9. Anne C. Sibert & Alan Sutherland, . "Monetary Regimes and Labour Market Reform," Discussion Papers 97/14, Department of Economics, University of York.
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  14. David Fielding & Kalvinder Shields, 2003. "Economic Integration in West Africa: Does the CFA Make a Difference?," Discussion Papers in Economics 03/8, Department of Economics, University of Leicester.
  15. Fielding, David, 1996. "Asymmetries in the Behaviour of Members of a Monetary Union: A Game-Theoretic Model with an Application to West Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 5(3), pages 343-65, October.
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Cited by:
  1. René TAPSOBA & Jean-Louis COMBES & Nasser ARY TANIMOUNE, 2012. "Policy Mix Coherence: What Does it Mean for Monetary Policy in West Africa?," Working Papers 201213, CERDI.

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