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Investigating Business Cycle Synchronization in West Africa

  • Simeon Coleman

This paper contributes to the discussion on the long term sustainability of the embryonic second monetary union in Africa, the West African Monetary Zone (WAMZ). We analyse the level of economic and monetary integration in West Africa by analysing the degree of growth cycle synchronisation between five candidate countries over the past thirty years. Our empirical approach improves on the standard Pearson Correlation between trend and cyclical components of GDP by analyzing a measure of co-movement at higher frequencies between computed z-scores for all possible pairings of the candidate countries. Our results indicate a lack of a consistent pattern of synchronized growth cycles, which raises concerns about the economic sustainability of the WAMZ, as it implies that members may face significant stabilisation costs. Some policy implications are discussed.

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File URL: http://www.ntu.ac.uk/research/document_uploads/106216.pdf
File Function: First version, 2011
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Paper provided by Nottingham Trent University, Nottingham Business School, Economics Division in its series Working Papers with number 2011/01.

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Date of creation: Apr 2011
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Handle: RePEc:nbs:wpaper:2011/01
Contact details of provider: Web page: http://www.ntu.ac.uk/nbs

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  1. Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-25, July.
  2. Vitor Leone & Bruce Philp, 2010. "Surplus-Value And Aggregate Concentration In The Uk Economy, 1987-2009," Working Papers 2010/10, Nottingham Trent University, Nottingham Business School, Economics Division.
  3. Todd E. Clark & Eric van Wincoop, 1999. "Borders and business cycles," Staff Reports 91, Federal Reserve Bank of New York.
  4. Calderon, Cesar & Chong, Alberto & Stein, Ernesto, 2007. "Trade intensity and business cycle synchronization: Are developing countries any different?," Journal of International Economics, Elsevier, vol. 71(1), pages 2-21, March.
  5. Gregory, Allan W & Head, Allen C & Raynauld, Jacques, 1997. "Measuring World Business Cycles," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 677-701, August.
  6. Crosby, Mark, 2003. "Business cycle correlations in Asia-Pacific," Economics Letters, Elsevier, vol. 80(1), pages 35-44, July.
  7. D. Furceri & G. Karras, 2008. "Business-cycle synchronization in the EMU," Applied Economics, Taylor & Francis Journals, vol. 40(12), pages 1491-1501.
  8. Imbs, Jean, 2000. "Sectors and the OECD Business Cycle," CEPR Discussion Papers 2473, C.E.P.R. Discussion Papers.
  9. Robert Ackrill & Adrian Kay, 2010. "WTO Regulations and Bioenergy Sustainability Certification – Synergies and Possible Conflicts," Working Papers 2010/9, Nottingham Trent University, Nottingham Business School, Economics Division.
  10. Andrew Abbott & Joshy Easaw & Tao Xing, 2008. "Trade Integration and Business Cycle Convergence: Is the Relation Robust across Time and Space?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(2), pages 403-417, 06.
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