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Business Cycles in the Maghreb: Does Trade Matter?

Author

Listed:
  • Eggoh, Jude

    (Groupe de Recherche Angevin en Economie et Management (GRANEM))

  • Belhadj, Aram

    (Université de Carthage)

Abstract

In this paper, we test the Frankel & Rose hypothesis of Optimum Currency Area for the Maghreb countries by demonstrating how the co-movements of outputs would respond to a trade integration process. In particular, by using panel analysis over the period 1980~2010, we evaluate if a monetary integration project across these countries is endogenous. Our main result suggests that while trade intensity may help to harmonize business cycles, the magnitude of this harmonization is lower for the Maghreb countries than for industrial countries. This result is robust even when we take into consideration many control variables including intra-industry trade, economic diversification, and financial integration. Therefore, we suggest that an acceleration of trade linkage as well as product diversification should take place prior to any move towards monetary union across the Maghreb countries.

Suggested Citation

  • Eggoh, Jude & Belhadj, Aram, 2015. "Business Cycles in the Maghreb: Does Trade Matter?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 30(3), pages 553-576.
    • Handle: RePEc:ris:integr:0668
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    Citations

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    Cited by:

    1. Kinfack, Emilie & Bonga-Bonga, Lumengo, 2020. "Trade Linkages and Business Cycle Co-movement: Analysis of Trade between African Economies and their Main Trading partners," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(2), pages 275-306.
    2. Gammadigbe, Vigninou, 2022. "Financial Cycles Synchronization in WAEMU Countries: Implications for Macroprudential Policy," Finance Research Letters, Elsevier, vol. 46(PA).

    More about this item

    Keywords

    Business Cycles; Trade Intensity; Intra-Industry Trade; Maghreb;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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