A Common Monetary Policy For The Maghreb: The Winners and The Losers?
During the Arab banks-summit in Paris last June 2008, the project of monetary integration in the Maghreb (Algeria, Libya, Morocco, Mauritania and Tunisia) was discussed again. Yet, many efforts have been undertaken to reinforce the completion of the regional integration process in this part of the world. These were initiated in 1989 by the creation of the Arab Maghreb Union (AMU) and expanded last years to cover the possibility of establishing the Maghreb monetary union. Our aim in this paper consists in assessing the relevance of such a project for three Maghreb countries: Algeria, Morocco and Tunisia. To do that, we try to simulate an aggregated monetary rule describing a common monetary policy in an open economy. This rule is constructed and compared to national monetary rules already simulated in many other works. Such a construction and comparison allow us to verify if a common monetary policy will be beneficial to all countries or, if on the contrary, it will be beneficial to one country rather than the others. Our results suggest that a common monetary policy will be more beneficial to Algeria than to Morocco or Tunisia. In fact, the common central bank has to grant more weight to activity rather than inflation or exchange rate, a result which often coincides with the national Algerian rule.
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