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Heterogeneity of the Maghreb: the results of optimized monetary rules

  • Belhadj, Aam

The launch of the euro has fed doubts concerning the constitution of an optimal European monetary zone. Indeed, the differences in legal, institutional and cultural frameworks… as well as the diversity of the productive and financial European systems may have led to the idea that Europe does not constitute a viable monetary zone. In Africa, the decision of African Central Bank governors to adopt a single currency by 2021 and the call from the union of Maghreb banks in November 2007 to create one currency for the Maghreb (Algeria, Libya, Morocco, Mauritania and Tunisia) raises the same doubts as to the efficiency of such decisions. In this preliminary work, we have tried to evaluate implicitly the pertinence of such decision by showing in a first section the heterogeneity of Maghrebian monetary regimes. We have tried to illustrate in a second section this heterogeneity via a model describing the functioning of the economy of these countries. Finally, we have attempted to show in a third section the consequences of these heterogeneities by simulating optimal monetary rules defined for each country. Our results suggest that these countries will need divergent Taylor rules and that the decision to belong to the same monetary union where a common monetary policy will be conducted proved to be unsuitable.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 40374.

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Date of creation: 10 Jul 2009
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Publication status: Published in Global Business and Management Research: An International Journal 3 & 4.1(2009): pp. 1-24
Handle: RePEc:pra:mprapa:40374
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  1. Jamal Bouoiyour & Velayoudom Marimoutou & Serge Rey, 2004. "Taux de change reel d'equilibre et politique de change au Maroc : une approche non parametrique," Economie Internationale, CEPII research center, issue 97, pages 81-104.
  2. Hughes Hallett, Andrew & Weymark, Diana, 2002. "The Cost of Heterogeneity in a Monetary Union," CEPR Discussion Papers 3223, C.E.P.R. Discussion Papers.
  3. Laurence Ball, 1998. "Policy Rules for Open Economies," NBER Working Papers 6760, National Bureau of Economic Research, Inc.
  4. M S Mohanty & Marc Klau, 2001. "What determines inflation in emerging market economies?," BIS Papers chapters, in: Bank for International Settlements (ed.), Modelling aspects of the inflation process and the monetary transmission mechanism in emerging market countries, volume 8, pages 1-38 Bank for International Settlements.
  5. Michael D. Bordo & Lars Jonung, 1999. "The Future of EMU: What Does the History of Monetary Unions Tell Us?," NBER Working Papers 7365, National Bureau of Economic Research, Inc.
  6. Belhadj, Aam & bangake, Chrysost & Jedlane, NABIL, 2007. "Toward Maghreb monetary unification:what does the theory and history tell us?," MPRA Paper 40375, University Library of Munich, Germany.
  7. Benbouziane, Mohamed & Benamar, Abdelhak, 2004. "The relationship between money and prices in the maghreb countries: a cointegration analysis," MPRA Paper 12741, University Library of Munich, Germany.
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