IDEAS home Printed from https://ideas.repec.org/a/eme/jespps/v41y2014i5p737-750.html
   My bibliography  Save this article

Does regional currency integration ameliorate global macroeconomic shocks in sub-Saharan Africa? The case of the 2008-2009 global financial crisis

Author

Listed:
  • Gregory N. Price
  • Juliet U. Elu

Abstract

Purpose - – The purpose of this paper is to consider whether regional currency integration in sub-Saharan Africa ameliorates global macroeconomic shocks by considering the impact of the 2008-2009 global financial crisis on economic growth. This suggests that Central Africa Franc Zone (CFAZ) eurocurrency union membership amplifies the effects of global business cycles in sub-Saharan Africa. Design/methodology/approach - – The authors estimate the parameters of a quantity theory model of economic growth within a Generalized Estimating Equation (GEE) Framework. Findings - – Parameter estimates from GEE specifications reveal that the contraction in credit during the financial crisis of 2008-2009 had larger adverse growth effects on sub-Saharan African countries who were members of the CFAZ eurocurrency union. The authors also find that sub-Saharan African countries who were members of the CFAZ eurocurrency union were more likely to experience a contraction in credit. Originality/value - – As far as the authors can discern, no existing empirical growth models use a GEE framework to estimate parameters of interest. The GEE parameter estimates are distribution-free, robust with respect to unknown forms of heteroskedasticity, and control for a wide variety of error structures that can induce bias in panel data parameter estimates.

Suggested Citation

  • Gregory N. Price & Juliet U. Elu, 2014. "Does regional currency integration ameliorate global macroeconomic shocks in sub-Saharan Africa? The case of the 2008-2009 global financial crisis," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 41(5), pages 737-750, September.
  • Handle: RePEc:eme:jespps:v:41:y:2014:i:5:p:737-750
    DOI: 10.1108/JES-08-2011-0092
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JES-08-2011-0092/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JES-08-2011-0092/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1108/JES-08-2011-0092?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Balogun, Emmanuel Dele, 2008. "An alternative reconsideration of macroeconomic convergence criteria for West African Monetary Zone," MPRA Paper 11367, University Library of Munich, Germany.
    2. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    3. Augustin Kwasi Fosu, 2010. "The Global Financial Crisis and Development: Whither Africa?," WIDER Working Paper Series 124, World Institute for Development Economic Research (UNU-WIDER).
    4. Xavier Debrun & Paul Masson & Catherine Pattillo, 2003. "West African Currency Unions: Rationale and Sustainability," CESifo Economic Studies, CESifo Group, vol. 49(3), pages 381-413.
    5. Wei Pan, 2001. "Akaike's Information Criterion in Generalized Estimating Equations," Biometrics, The International Biometric Society, vol. 57(1), pages 120-125, March.
    6. Jean–paul Azam & Njuguna Ndung’u & Augustin Fosu, 2002. "Explaining Slow Growth in Africa," African Development Review, African Development Bank, vol. 14(2), pages 177-220.
    7. Paul R. Masson, 2019. "Currency Unions in Africa: Is the Trade Effect Substantial Enough to Justify Their Formation?," World Scientific Book Chapters, in: Macroeconomic Modelling and Monetary and Exchange Rate Regimes, chapter 7, pages 243-262, World Scientific Publishing Co. Pte. Ltd..
    8. Robert G. King & Mark W. Watson, 1997. "Testing long-run neutrality," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 69-101.
    9. Alberto Alesina & Robert J. Barro, 2002. "Currency Unions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 409-436.
    10. Ziesemer, Thomas H.W., 2010. "The impact of the credit crisis on poor developing countries: Growth, worker remittances, accumulation and migration," Economic Modelling, Elsevier, vol. 27(5), pages 1230-1245, September.
    11. Reimers, Hans-Eggert & Herwartz, Helmut, 2001. "Long-Run Links Among Money, Prices, and Output: World-Wide Evidence," Discussion Paper Series 1: Economic Studies 2001,14, Deutsche Bundesbank.
    12. Henstridge, N M, 1999. "De-monetisation, Inflation and Coffee: The Demand for Money in Uganda," Journal of African Economies, Centre for the Study of African Economies, vol. 8(3), pages 345-385, October.
    13. Godwin Nwaobi, 2002. "A vector error correction and nonnested modeling of money demand function in Nigeria," Economics Bulletin, AccessEcon, vol. 3(4), pages 1-8.
    14. Uwaifo Oyelere, Ruth, 2010. "Africa's education enigma? The Nigerian story," Journal of Development Economics, Elsevier, vol. 91(1), pages 128-139, January.
    15. Abdoulaye Diop & Gilles Dufrénot & Gilles Sanon, 2010. "Is Per Capita Growth in Africa Hampered by Poor Governance and Weak Institutions? An Empirical Study on the ECOWAS Countries," African Development Review, African Development Bank, vol. 22(2), pages 265-275.
    16. Lemma W. Senbet, 2001. "Global Financial Crisis: Implications for Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 10(suppl_1), pages 104-140.
    17. Fielding, David & Shields, Kalvinder, 2001. "Modelling macroeconomic shocks in the CFA Franc Zone," Journal of Development Economics, Elsevier, vol. 66(1), pages 199-223, October.
    18. FOSU, Augustin Kwasi, 2008. "Democracy and growth in Africa: Implications of increasing electoral competitiveness," Economics Letters, Elsevier, vol. 100(3), pages 442-444, September.
    19. José Brambila-Macias & Isabella Massa, 2010. "The Global Financial Crisis and Sub-Saharan Africa: The Effects of Slowing Private Capital Inflows on Growth," African Development Review, African Development Bank, vol. 22(3), pages 366-377.
    20. Elizabeth Asiedu & James Freeman, 2009. "The Effect of Corruption on Investment Growth: Evidence from Firms in Latin America, Sub‐Saharan Africa, and Transition Countries," Review of Development Economics, Wiley Blackwell, vol. 13(2), pages 200-214, May.
    21. Chor, Davin & Manova, Kalina, 2012. "Off the cliff and back? Credit conditions and international trade during the global financial crisis," Journal of International Economics, Elsevier, vol. 87(1), pages 117-133.
    22. Robert Barro & Silvana Tenreyro, 2007. "Economic Effects Of Currency Unions," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 1-23, January.
    23. Andrew Muhammad, 2009. "Would African Countries Benefit from the Termination of Kenya’s Economic Partnership Agreement (EPA) with the EU? An Analysis of EU Demand for Imported Roses," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 220-238, February.
    24. M. Brownbridge & C. Kirkpatrick, 2000. "Financial Regulation in Developing Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 37(1), pages 1-24, October.
    25. Fosu, Augustin Kwasi & Naude, Wim, 2009. "The Global Economic Crisis: Towards Syndrome-Free Recovery for Africa," WIDER Working Paper Series WIDER Discussion Paper 20, World Institute for Development Economic Research (UNU-WIDER).
    26. James Cui, 2007. "QIC program and model selection in GEE analyses," Stata Journal, StataCorp LP, vol. 7(2), pages 209-220, June.
    27. Alemayehu Geda & Haile Kebret, 2008. "Regional Economic Integration in Africa: A Review of Problems and Prospects with a Case Study of COMESA," Journal of African Economies, Centre for the Study of African Economies, vol. 17(3), pages 357-394, June.
    28. Mihasonirina Andrianaivo & Charles Yartey, 2010. "Understanding the Growth of African Financial Markets," African Development Review, African Development Bank, vol. 22(3), pages 394-418.
    29. Augustin Kwasi Fosu, 2009. "Inequality and the Impact of Growth on Poverty: Comparative Evidence for Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 726-745.
    30. Houssa, Romain, 2008. "Monetary union in West Africa and asymmetric shocks: A dynamic structural factor model approach," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 319-347, February.
    31. Jean Boivin & Marc P. Giannoni & Benoît Mojon, 2008. "How Has the Euro Changed the Monetary Transmission?," NBER Working Papers 14190, National Bureau of Economic Research, Inc.
    32. Xavier Debrun & Paul R. Masson & Catherine Pattillo, 2011. "Should African Monetary Unions Be Expanded? An Empirical Investigation of the Scope for Monetary Integration in Sub-Saharan Africa-super- †," Journal of African Economies, Centre for the Study of African Economies, vol. 20(suppl_2), pages -150, May.
    33. repec:ebl:ecbull:v:3:y:2002:i:4:p:1-8 is not listed on IDEAS
    34. Henri Ngoa Tabi & Henri Atangana Ondoa, 2011. "Inflation, Money and Economic Growth in Cameroon," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 2(1), pages 45-56, March.
    35. Augustin Kwasi Fosu, 2010. "The Global Financial Crisis and Development: Whither Africa," WIDER Working Paper Series wp-2010-124, World Institute for Development Economic Research (UNU-WIDER).
    36. Emmanuel Anoruo, 2002. "Stability of the Nigerian M2 Money Demand Function in the SAP Period," Economics Bulletin, AccessEcon, vol. 14(3), pages 1-9.
    37. David Fielding, 1994. "Money Demand in Four African Countries," Journal of Economic Studies, Emerald Group Publishing, vol. 21(2), pages 3-37, May.
    38. Mohsen Bahmani-Oskooee & Abera Gelan, 2007. "On the Relation between Nominal Devaluation and Real Devaluation: Evidence from African Countries," Journal of African Economies, Centre for the Study of African Economies, vol. 16(2), pages 177-197, March.
    39. Helmut Herwartz & Hans-Eggert Reimers, 2006. "Long-Run Links among Money, Prices and Output: Worldwide Evidence," German Economic Review, Verein für Socialpolitik, vol. 7, pages 65-86, February.
    40. DS Allen & L Ndikumana, 2000. "Financial intermediation and economic growth in Southern Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 9(2), pages 132-160.
    41. John Anyanwu, 2003. "Estimating the Macroeconomic Effects of Monetary Unions: The Case of Trade and Output," African Development Review, African Development Bank, vol. 15(2‐3), pages 126-145.
    42. Helmut Herwartz & Hans‐Eggert Reimers, 2006. "Long‐Run Links among Money, Prices and Output: Worldwide Evidence," German Economic Review, Verein für Socialpolitik, vol. 7(1), pages 65-86, February.
    43. Osili, Una Okonkwo, 2007. "Remittances and savings from international migration: Theory and evidence using a matched sample," Journal of Development Economics, Elsevier, vol. 83(2), pages 446-465, July.
    44. Kwabena Gyimah-Brempong & Marva E. Corley, 2005. "Civil Wars and Economic Growth in Sub-Saharan Africa1," Journal of African Economies, Centre for the Study of African Economies, vol. 14(2), pages 270-311, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kodila-Tedika, Oasis & Asongu, Simplice A. & Cinyabuguma, Matthias & Tchamyou, Vanessa S., 2017. "Financial development and prehistoric geographical isolation: global evidence," Financial History Review, Cambridge University Press, vol. 24(3), pages 283-306, December.
    2. Simplice Asongu & Lieven De Moor & Vanessa Tchamyou, 2015. "Pre- and post-crisis dynamics of financial globalisation for financial development in Africa," Working Papers of the African Governance and Development Institute. 15/045, African Governance and Development Institute..
    3. Simplice A. Asongu & Joseph Nnanna & Paul N. Acha-Anyi, 2021. "The Openness Hypothesis in the Context of Economic Development in Sub-Saharan Africa: The Moderating Role of Trade Dynamics on FDI," The International Trade Journal, Taylor & Francis Journals, vol. 35(4), pages 336-359, July.
    4. Simplice A. Asongu & Joseph Nnanna & Vanessa S. Tchamyou, 2020. "The comparative African regional economics of globalization in financial allocation efficiency: the pre-crisis era revisited," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-41, December.
    5. Simplice A. Asongu & Rexon T. Nting & Joseph Nnanna, 2020. "Linkages between Globalisation, Carbon Dioxide Emissions and Governance in Sub-Saharan Africa," International Journal of Public Administration, Taylor & Francis Journals, vol. 43(11), pages 949-963, August.
    6. Simplice A Asongu & Lieven De Moor, 2017. "Financial Globalisation Dynamic Thresholds for Financial Development: Evidence from Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(1), pages 192-212, January.
    7. Simplice Asongu & Uchenna Efobi & Ibukun Beecroft, 2015. "Inclusive Human Development in Pre-crisis Times of Globalization-driven Debts," African Development Review, African Development Bank, vol. 27(4), pages 428-442, December.
    8. Asongu, Simplice & Odhiambo, Nicholas, 2020. "The role of Globalization in Modulating the Effect of Environmental Degradation on Inclusive Human Development," MPRA Paper 103143, University Library of Munich, Germany.
    9. Simplice A. Asongu & Jacinta C. Nwachukwu, 2017. "The Comparative Inclusive Human Development of Globalisation in Africa," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(3), pages 1027-1050, December.
    10. Asongu, Simplice A., 2017. "Assessing marginal, threshold, and net effects of financial globalisation on financial development in Africa," Journal of Multinational Financial Management, Elsevier, vol. 40(C), pages 103-114.
    11. Asongu, Simplice A. & Biekpe, Nicholas, 2018. "Globalization and terror in Africa," International Economics, Elsevier, vol. 156(C), pages 86-97.
    12. Asongu, Simplice A. & Koomson, Isaac & Tchamyou, Vanessa S., 2017. "Financial globalisation uncertainty/instability is good for financial development," Research in International Business and Finance, Elsevier, vol. 41(C), pages 280-291.
    13. Simplice A. Asongu & Joseph Nnanna, 2020. "Financial crisis, financial globalisation and financial development in Africa," Working Papers 20/049, European Xtramile Centre of African Studies (EXCAS).
    14. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Trade and FDI Thresholds of CO2 emissions for a Green Economy in Sub-Saharan Africa," Working Papers 20/072, European Xtramile Centre of African Studies (EXCAS).
    15. Simplice A. Asongu & Jules R. Minkoua N., 2018. "Dynamic openness and finance in Africa," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(4), pages 409-430, May.
    16. Oasis Kodila-Tedika & Simplice Asongu & Matthias Cinyabuguma, 2016. "Financial Development and Geographic Isolation: Global Evidence," Working Papers of the African Governance and Development Institute. 16/014, African Governance and Development Institute..
    17. Asongu Simplice & Nwachukwu Jacinta, 2017. "Globalization and Inclusive Human Development in Africa," Man and the Economy, De Gruyter, vol. 4(1), pages 1-24, June.
    18. Simplice A. Asongu & Uchenna Efobi & Belmondo V. Tanankem & Evans S. Osabuohien, 2019. "Globalisation and Female Economic Participation in Sub-Saharan Africa," Working Papers of The Association for Promoting Women in Research and Development in Africa (ASPROWORDA). 19/005, The Association for Promoting Women in Research and Development in Africa (ASPROWORDA).
    19. Simplice A. Asongu & Paul N. Acha-Anyi, 2017. "ICT, conflicts in financial intermediation and financial access: evidence of synergy and threshold effects," Netnomics, Springer, vol. 18(2), pages 131-168, December.
    20. Simplice Asongu & Vanessa Tchamyou, 2015. "The Comparative African Regional Economics of Globalization in Financial Allocation Efficiency," Working Papers of the African Governance and Development Institute. 15/053, African Governance and Development Institute..
    21. Simplice A. Asongu & Uchenna R. Efobi & Belmondo V. Tanankem, 2017. "On the Relationship between Globalisation and the Economic Participation of Women in Sub-Saharan Africa," Research Africa Network Working Papers 17/001, Research Africa Network (RAN).
    22. Simplice Asongu & Lieven De Moor, 2015. "Financial globalisation and financial development in Africa: assessing marginal, threshold and net effects," Working Papers of the African Governance and Development Institute. 15/040, African Governance and Development Institute..
    23. Titus A. Ojeyinka & Tolulope T. Osinubi, 2022. "The moderating role of financial development in the globalization-sustainable development nexus in some selected African Countries," Economic Change and Restructuring, Springer, vol. 55(4), pages 2051-2080, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elu Juliet U. & Price Gregory N., 2012. "Remittances and the Financing of Terrorism In Sub-Saharan Africa: 1974 - 2006," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 18(1), pages 1-42, July.
    2. Adu, Raymond & Litsios, Ioannis & Baimbridge, Mark, 2022. "ECOWAS single currency: Prospective effects on trade," Journal of International Money and Finance, Elsevier, vol. 126(C).
    3. Özgür Aslan & Levent Korap, 2007. "Testing Quantity Theory of Money for the Turkish Economy," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 1(2), pages 93-109.
    4. Juliet Elu & Gregory Price, 2013. "Ethnicity as a Barrier to Childhood and Adolescent Health Capital in Tanzania: Evidence from the Wage-Height Relationship," African Development Review, African Development Bank, vol. 25(1), pages 1-13.
    5. Zia-Ur- Rahman, 2019. "Influence of Excessive Expenditure of the Government in Perspective of Interest Rate and Money Circulation Which in Turn Affects the Growing Process in Pakistan," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 6(2), pages 120-129.
    6. Asongu, Simplice A. & Folarin, Oludele E. & Biekpe, Nicholas, 2019. "The long run stability of money demand in the proposed West African monetary union," Research in International Business and Finance, Elsevier, vol. 48(C), pages 483-495.
    7. Kumar, Saten & Webber, Don J. & Fargher, Scott, 2013. "Money demand stability: A case study of Nigeria," Journal of Policy Modeling, Elsevier, vol. 35(6), pages 978-991.
    8. Samba Diop & Simplice A. Asongu, 2020. "An Index of African Monetary Integration (IAMI)," Working Papers 20/003, European Xtramile Centre of African Studies (EXCAS).
    9. Augustin Kwasi Fosu, 2010. "Africa's Economic Future: Learning from the Past," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(1), pages 62-71, April.
    10. Simplice Asongu & Jacinta C. Nwachukwu & Vanessa S. Tchamyou, 2017. "A summary of a survey on proposed African monetary unions," Working Papers of the African Governance and Development Institute. 17/008, African Governance and Development Institute..
    11. Tomáš Urbanovský, 2017. "Granger Causalities Between Interest Rate, Price Level, Money Supply and Real Gdp in the Czech Republic," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 65(2), pages 745-757.
    12. Augustin Kwasi Fosu, 2022. "Institutions and African Economic Development," Working Papers 202202, University of Pretoria, Department of Economics.
    13. Couharde, Cécile & Coulibaly, Issiaka & Guerreiro, David & Mignon, Valérie, 2013. "Revisiting the theory of optimum currency areas: Is the CFA franc zone sustainable?," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 428-441.
    14. Srinivasan Palamalai & Kalaivani Mariappan & Christopher Devakumar, 2014. "On the Temporal Causal Relationship Between Macroeconomic Variables," SAGE Open, , vol. 4(1), pages 21582440145, February.
    15. Agenor, Pierre-Richard & Aizenman, Joshua, 2008. "Capital Market Imperfections and the Theory of Optimum Currency Areas," Santa Cruz Department of Economics, Working Paper Series qt7668j94x, Department of Economics, UC Santa Cruz.
    16. Agénor, Pierre-Richard & Aizenman, Joshua, 2011. "Capital market imperfections and the theory of optimum currency areas," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1659-1675.
    17. Yazdan Naghdi & Nasibeh Kakoei, 2011. "Money and Inflation in Iran: Evidence from P* Model," Journal of Economics and Behavioral Studies, AMH International, vol. 3(5), pages 311-316.
    18. Couharde, Cécile & Grekou, Carl & Mignon, Valérie, 2022. "On the economic desirability of the West African monetary union: Would one currency fit all?," Economic Modelling, Elsevier, vol. 113(C).
    19. El-Shagi, Makram & Giesen, Sebastian, 2013. "Money and inflation: Consequences of the recent monetary policy," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 520-537.
    20. Simplice Asongu & Jacinta Nwachukwu & Vanessa Tchamyou, 2017. "A Literature Survey On Proposed African Monetary Unions," Journal of Economic Surveys, Wiley Blackwell, vol. 31(3), pages 878-902, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jespps:v:41:y:2014:i:5:p:737-750. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.