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Are African business cycles synchronized? Evidence from spatio-temporal modeling

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  • Mattera, Raffaele
  • Franses, Philip Hans

Abstract

This paper investigates the business cycle synchronization in Africa, which is important for the definition of optimal monetary unions. Previous studies adopted either a cross-sectional or a time series approach, and this may have led to substantial variation in the findings for common business cycles across African countries. Considering fifty-two African economies, we study business cycles’ synchronization with a novel spatio-temporal hierarchical approach founded on the gravity model. The introduction of the spatial dimension is particularly relevant for Africa, where infrastructure constraints make monetary unions less feasible due to higher trading costs. We find positive evidence for the Economic Community of West African States (ECOWAS) and the Common Monetary Area (CMA) feasibility, while our results do not support the Central Africa CFA and the East African Monetary Union (EAMU) monetary unions.

Suggested Citation

  • Mattera, Raffaele & Franses, Philip Hans, 2023. "Are African business cycles synchronized? Evidence from spatio-temporal modeling," Economic Modelling, Elsevier, vol. 128(C).
    • Handle: RePEc:eee:ecmode:v:128:y:2023:i:c:s0264999323002973
    DOI: 10.1016/j.econmod.2023.106485
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    More about this item

    Keywords

    Economic growth in Africa; Dynamic Time Warping; Time series; Spatial analysis; Hierarchical clustering; Monetary union;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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