Abstract
In this paper, we analyze the feasibility of an African monetary union based on the necessary condition of business cycle synchronization. In this regard, we examine the synchronization of growth cycles between five Regional Economic Communities (RECs) that will have to merge to form an African monetary union: the East African Community; the Economic Community of Central African States; the Economic Community of West African States; the Southern African Development Community; and the Arab Maghreb Union. To do this, we use a new continuous wavelet approach. Results show evidence of heterogeneous synchronization across time and horizons between the RECs. Controlling for the influence of some countries' membership in several RECs at the same time, the synchronization landscape does not improve. Overall, our results suggest that business cycle synchronization across the RECs has not yet reached a sufficient level to allow African countries to benefit from a common monetary policy.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
