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Eastern and Southern Africa Monetary Integration: A Structural Vector Autoregression Analysis

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  • Steven K. Buigut
  • Neven T. Valev

Abstract

This paper uses VAR techniques to investigate the potential for forming monetary unions in Eastern and Southern Africa. All countries in the sample are members of various regional economic organizations. Some of the organizations have a monetary union as an immediate objective whereas others consider it as a possibility in the more distant future. Our objective is to sort out which countries are suitable candidates for a monetary union based on the synchronicity of demand and supply disturbances. Although economic shocks are not highly correlated across the entire region, we tentatively identify three sub-regional clusters of countries that may benefit from a currency union. We find some tentative evidence that some, though not all, sub-regions may benefit from a link to the Euro. Copyright © 2006 The Authors; Journal compilation © 2006 Blackwell Publishing Ltd.

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  • Steven K. Buigut & Neven T. Valev, 2006. "Eastern and Southern Africa Monetary Integration: A Structural Vector Autoregression Analysis," Review of Development Economics, Wiley Blackwell, vol. 10(4), pages 586-603, November.
  • Handle: RePEc:bla:rdevec:v:10:y:2006:i:4:p:586-603
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    References listed on IDEAS

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    1. T. Paul Schultz & Germano Mwabu, 1998. "Labor Unions and the Distribution of Wages and Employment in South Africa," ILR Review, Cornell University, ILR School, vol. 51(4), pages 680-703, July.
    2. Fidrmuc, Jarko & Korhonen, Iikka, 2001. "Similarity of supply and demand shocks between the euro area and the accession countries," BOFIT Discussion Papers 14/2001, Bank of Finland, Institute for Economies in Transition.
    3. Tamim Bayoumi & Barry Eichengreen, 1992. "Shocking Aspects of European Monetary Unification," NBER Working Papers 3949, National Bureau of Economic Research, Inc.
    4. Andrew K. Rose & T. D. Stanley, 2005. "A Meta-Analysis of the Effect of Common Currencies on International Trade ," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 347-365, July.
    5. Mkenda, Beatrice Kalinda, 2001. "Is East Africa an Optimum Currency Area?," Working Papers in Economics 41, University of Gothenburg, Department of Economics.
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    Cited by:

    1. Gilles Dufrénot & Kimiko Sugimoto, 2013. "West African Single Currency and Competitiveness," Review of Development Economics, Wiley Blackwell, vol. 17(4), pages 763-777, November.
    2. George S. Tavlas, 2009. "The Benefits And Costs Of Monetary Union In Southern Africa: A Critical Survey Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 1-43, February.
    3. Carlos Vieira & Isabel Vieira, 2013. "Monetary Integration In Eastern And Southern Africa: Choosing A Currency Peg For Comesa," South African Journal of Economics, Economic Society of South Africa, vol. 81(3), pages 356-372, September.
    4. M. J. Aziakpono & S. Kleimeier & H. Sander, 2012. "Banking market integration in the SADC countries: evidence from interest rate analyses," Applied Economics, Taylor & Francis Journals, vol. 44(29), pages 3857-3876, October.
    5. Kamal, Mona, 2015. "Egypt Relative to the COMESA’s Member States: Do Fiscal Policy Rules Matter?," MPRA Paper 67101, University Library of Munich, Germany.
    6. Mulatu F. Zerihun & Marthinus C. Breitenbach & Francis Kemegue, 2014. "A Greek Wedding In SADC? Testing For Structural Symmetry Towards SADC Monetary Integration," The African Finance Journal, Africagrowth Institute, vol. 16(2), pages 16-33.

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