Monetary Zone Research Articles

GLOBAL RESEARCH DYNAMICS ABOUT PUBLIC DEBT: RISING PUBLIC DEBT AND THE EUROPEAN FISCAL UNION

This paper aims to bring Romanian research on public debt into the international spotlight, contextualizing it within the rising global debt levels caused by recent economic crises, such as the global financial crisis and the Covid-19 pandemic. The main goal is to highlight the importance of local research, often overlooked, while analyzing public debt through both global and local lenses. The first part of the paper analyzes the intensifying effects of globalization, accelerated by the Covid-19 pandemic, and the shift in how public debt is perceived, with a growing focus on investments and budget deficits. It also examines the challenges faced by decision-makers in managing debt sustainability, particularly the tension between political priorities and fiscal realities. The second part provides an empirical analysis of recent studies on the rise of global public debt, political economy factors, and credit cycles. The third section outlines the difficulties in governing public debt in the European Union due to the absence of a fiscal union and explores the concept of an optimal monetary zone. One of the central political issues raised is the tendency of politicians, especially in advanced economies, to exploit public debt for short-term electoral gains.

The impacts of convergence policies on macroeconomic stability in the West African monetary zone

PurposeThis paper examines the effectiveness of the joint impact of convergence policy measures on macroeconomic stability conditions in the West African monetary zone (WAMZ) countries, using an annual panel data from 1990 to 2021.Design/methodology/approachIt uses the dynamic autoregressive distributed lag (ARDL) approach to exploit the short and long run dynamics macro stability. A composite convergence index was constructed and its impact was examined on three different macroeconomic stability measures representing: internal stability, external stability and overall stability.FindingsFindings from the study suggest that a unit deviation of the convergence policy index from its mean, in the short run, leads to worsening external and overall macroeconomic stability conditions in the zone, but it leads to improvement in the internal macroeconomic stability conditions. However, in the long run, the opposite occurs, a unit deviation of the convergence policy index from its mean, it leads to improvement in both external and overall macroeconomic stability situations and deterioration in internal macroeconomic stability situation.Practical implicationsIt is concluded that the convergence policy criteria are effective only in the long run and therefore these policies alone cannot be used to achieve short run macroeconomic stability within the zone. Thus, policymakers should have a second look at how fiscal and monetary policies are conducted and also work to address structural challenges.Originality/valueThe paper examines the effectiveness of the joint impact of convergence policy measures on macroeconomic stability conditions in the WAMZ countries.

World War II and Socialist Integration: In Search of the Theoretical Foundations for Building the Socialist Bloc (1940–64)

This article presents the development of ideas on coordination between countries with socialist economic systems during World War II and in its immediate aftermath (1940–64). It studies the theoretical models of Hoselitz and the debates on the possibilities of interaction between socialist states after the war, as well as the first attempts to develop integration within the framework of the CMEA, or the Council for Mutual Economic Assistance, in practice. The lack of a clear theory made these processes difficult. Yugoslav economists considered nonequivalent exchange within the Marxist paradigm and attempts to create a monetary zone of the ruble encountered difficulties from the outset. Monetary reforms in socialist countries showed the need to adapt to the world (capitalist) market.

Asymmetric effects of exchange rate and oil price on export performance and economic growth in WAMZ

The purpose of the study is to explore the effects of exchange rate and oil price asymmetries on export performance and economic growth in the West African Monetary Zone (WAMZ). The study uses monthly data from 1970 to 2022. The study makes use of the asymmetric ARDL approach. Our findings show that there exists a long-run relationship between oil price, exchange rate, export performance, and output growth. We find that depreciation of the exchange rate and increases in oil prices generally hinder the economic prospects of these nations. Furthermore, it was found that currency depreciation did not significantly improve the export performance of these nations, primarily due to the largely stagnant manufacturing sectors and other challenges such as infrastructural decadence that these nations face. The findings imply that these countries, as well as the rest of Africa, still need to implement sincere and significant economic changes. We need to make large-scale investments in infrastructure development, revive the dormant manufacturing sector, actively and transparently combat corruption at all levels, and take other actions to stabilize their currencies and boost export performance, all of which will contribute to economic prosperity. We also recommend a strong institutional framework that will strengthen and support the effective policy outcomes.

Financial Development and Industrial Sector Growth in West African Monetary Zone (WAMZ): Does Inflation Matter?

Financial Development and Industrial Sector Growth in West African Monetary Zone (WAMZ): Does Inflation Matter?

The West African Monetary Zone: is inflation convergence sufficient for a currency union?

The West African Monetary Zone is a proposed monetary union among the nations of The Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone. A key characteristic for a well-functioning common currency is convergence in inflation rates among constituent members. A failure to achieve convergent inflation rates leads to real exchange rate misalignment, balance-of-payments problems, possible debt crises and economic stagnation as (often sticky) prices are all that can adjust when there is no possibility of nominal depreciation. Nigeria is by far the largest of the economies in the proposed union, and will likely dominate in terms of monetary policy. Using a pairwise approach, along with other methods, we find evidence that all other potential members exhibit inflation differentials vis-à-vis Nigeria that are, at a minimum very slow to converge to zero. There is also often slow convergence in inflation differentials among the other five nations. These findings strongly suggest much caution prior to the formal creation of this proposed common currency.

Nonlinearity and nonlinear convergence of inflation rates in the West African Monetary Zone: a way to Monetary Integration

Nonlinearity and nonlinear convergence of inflation rates in the West African Monetary Zone: a way to Monetary Integration

Unity versus Diversity in the Hellenistic Period

This paper offers a full description of the koinon hellenikon nomisma of the Hellenistic period and of almost all other coinages of the same period. The koinon hellenikon nomisma was issued on the Attic standard, while all other coinages were struck with different standards: Milesian, Aeginetan and reduced Aeginetan, Corinthian, Corcyrean, Persian, Nesiotic, Chian, the standard of Rhodes, that of the cities of Apollonia and Dyrrachium in Illyria, and of the kistophoroi. The use of these different standards pointed to previous monetary backgrounds of the cities and koina in question. It aimed, as was the case during the Archaic and the Classical periods, mainly to create different monetary zones, thus revealing, through the local circulation of coinages struck on the same standard, a sort of regional unity. This was not the case of the many Attic weight standard coinages. Alexanders, Antigonid, Seleucid, Attalid and other royal coinages, as well as coinages of cities minted with civic types and on the Attic standard, could circulate all around the vast Hellenistic world. The choice of kings and cities to mint on this standard and hoard evidence reveal that this was in fact the koinon hellenikon nomisma of the period. Epigraphic evidence supports this view: Alexanders – and other Attic weight coinages – served various military needs such as the payment of siteresia, the repair of walls, the payment of ransom to free prisoners, travel funds for theoroi and ambassadors, money for public subscriptions (epidoseis), and funds for various religious and other obligations. These were the needs that the koinon hellenikon nomisma of the Platonic Laws (742a-e) was supposed to fulfil. Thus, the Attic standard coinages refer to unity, while all others to diversity.

Political Stability, Corruption, and Economic Development: Evidence from WAMZ Countries

This paper examines the political stability, corruption, and economic progress of the nations that make up the West African Monetary Zone (WAMZ) between 2000 and 2020. To prevent misspecification bias and therefore skewed statistical results, the common features of the panel data were examined first. First of all, the CD test did not find any evidence of cross-sectional dependency across the nations, validating the use of the conventional panel unit root, which does not account for cross-sectional dependence. According to Levin et al. (2002)'s panel unit root test, the variables are integrated of order zero, or I (0).Using the panel VAR framework as a basis, the paper investigates. Emotional intelligence data demonstrated that while corruption impedes regional economic growth, political stability and the rule of law foster it. According to the findings of variance decomposition, the factors under investigation either support or impede the WAMZ countries' economic development. Based on the results the paper recommends that, transparency and accountability at all level of government affairs as well as respecting the constitution in these nations should be preserved in order to overcome all social and political injustice among the countries under study.

Political Stability, Corruption, and Economic Development : Evidence frim WAMZ Countries

The paper has analyzed the political stability, corruption and economic development in the West African Monetary Zone (WAMZ) countries for the period of 2000 to 2020. The common properties of the panel data were first checked to avoid mis-specification bias and hence biased statistical results. Firstly, the CD test revealed no evidence/absence of cross sectional dependence among the countries which validates the use of traditional panel unit root that does not take account of cross-sectional dependence. The results of panel unit root test proposed by Levin et al (2002) revealed that the variables are integrated of order zero i.e. I (0). Based on this, the paper explores within the panel VAR framework. Evidence from impulse response functions revealed that, political stability and rule of low are economic development promoters while corruption hampers economic development in the region. The results from variance decomposition indicate that the variables under study contribute or hinder economic development in the WAMZ countries. Based on the results the paper recommends that, transparency and accountability at all level of government affairs as well as respecting the constitution in these nations should be preserved in order to overcome all social and political injustice among the countries under study.

Political Stability, Corruption, and Economic Development: Evidence from WAMZ Countries

This paper examines the political stability, corruption, and economic progress of the nations that make up the West African Monetary Zone (WAMZ) between 2000 and 2020. To prevent misspecification bias and therefore skewed statistical results, the common features of the panel data were examined first. First of all, the CD test did not find any evidence of cross-sectional dependency across the nations, validating the use of the conventional panel unit root, which does not account for cross-sectional dependence. According to Levin et al. (2002)'s panel unit root test, the variables are integrated of order zero, or I (0).Using the panel VAR framework as a basis, the paper investigates. Emotional intelligence data demonstrated that while corruption impedes regional economic growth, political stability and the rule of law foster it. According to the findings of variance decomposition, the factors under investigation either support or impede the WAMZ countries' economic development. Based on the results the paper recommends that, transparency and accountability at all level of government affairs as well as respecting the constitution in these nations should be preserved in order to overcome all social and political injustice among the countries under study

Financial inclusion and monetary policy targets: Evidence from the ECOWAS countries

The study examines the impact of financial inclusion on monetary policy targets in the Economic Community of West African States for the period between 2004 and 2020. To capture how a shock to financial inclusion affects monetary policy targets in the ECOWAS sub-region, the study employs panel vector autoregression via the Generalized Method of Moments framework and uses the impulse response functions. The results show that in all ECOWAS countries, financial inclusion leads to an appreciation of the local currency, thereby improving the value of the exchange rate. However, it reduces the effectiveness of monetary policy. In particular, financial inclusion increases consumer prices and interest rates. Based on the findings, the study recommends, among others, the need for a single monetary policy in the ECOWAS sub-region to properly integrate its monetary policy framework in line with the economic and monetary integration policy of the West African Monetary Zone.

Public debt and economic growth in the West African monetary zone (WAMZ)

In this paper, we revisit the relationship between public debt and economic growth with a spotlight on the West African Monetary Zone (WAMZ). In the re-examination, we pursue three undertakings using both panel data and time series modelling techniques. First, we examine the linear relationship using the Autoregressive Distributed Lag (ARDL) model for time-series data and the fixed (or random) effect model for the panel data counterpart. Second, we assess the nonlinear relationship by incorporating the squared term of the debt variable as an additional explanatory variable in the models. Third, we identify the level of public debt/GDP ratio beyond which public debt becomes unsustainable using threshold regression techniques. The findings show a negative relationship across the linear models. We also establish that the debt-economic growth relationship is non-linear, and we obtain the points of inflection for the WAMZ countries. These levels are 71.9 % for Gambia, 55.8 % for Ghana, 91.5 % for Guinea, 83.7 % for Liberia, 38.45 % for Nigeria and 38.6 % for Sierra Leone. We make suggestions for the WAMZ countries to expand their economic bases by channelling funds to infrastructure development and the development of human capital in order to optimize the benefits of debt accumulation in the long run.

Impact of Geoeconomic Fragmentation on Regional Economic Integration in West Africa: A Post-Structuralist Discourse Approach

This paper explored the relationship between regional economic integration and geoeconomic fragmentation in the West African Sub-region. It focused on the future of the second West Africa Monetary Zone (WAMZ) within the continuing fragmented system. A post-structuralist discourse approach was used to analyze how geoeconomic and political risks affect the WAMZ convergence process. An assessment of fragility risk of the regional economic cooperation shows how the spillover effect of global geopolitical fragmentation is leading to regional geopolitical fragmentation, which breed cracks in the regional economic integration process among developing and fragile states. It is recommended that the regional economic integration framework should be revisited to strengthen institutional resilience and scale up monetary and financial system surveillance. The focus should be on building momentum towards strong institutional support to pursue a win-win approach towards the evolving regional fragmentation policies. For the member states, competing to attract FDI through friend-shoring and near-shoring is an utmost important, however, a concerted effort should portray the region as a neutral economic bloc and pursue a neutral-shoring as the fourth approach to fragmentation policy.

A Test for Inflation Persistence in West African Monetary Zone using the Fractionally Integrated & Fractionally Cointegrated VAR Models

A Test for Inflation Persistence in West African Monetary Zone using the Fractionally Integrated & Fractionally Cointegrated VAR Models

Energy Transition in West African Monetary Zone (WAMZ): Does Financial Development Matter?

This study provides valuable insights into the nexus between financial development and energy transition in the West African Monetary Zone (WAMZ), focusing on Nigeria, Ghana, Sierra Leone, Liberia, and Guinea. While financial development was measured using financial access, depth, and efficiency indexes, energy transition was measured by the share of the population with access to clean fuels for cooking and heating. For the data analysis, descriptive statistics, Levin, Lin, and Chu’s (LLC) panel unit root test, and a one-way error component random effects model were employed. The LLC panel unit root test results showed that all the variables are stationary, integrated with order zero, I(0). Specifically, the random effects results showed evidence of a positive and significant effect of financial service access on access to clean fuels for cooking and heating. This finding highlights the strategic role of financial access in driving the energy transition process in the WAMZ. Similarly, evidence of a positive and significant effect of financial depth on access to clean fuels for cooking and heating was established from the results. This finding is impressive as it explains that an increase in the depth of the financial system is critical to fostering energy transition in the WAMZ. The effect of financial efficiency on access to clean fuels for cooking and heating is positive. The causality test results established evidence of a joint causality from financial access, depth, and efficiency indexes to energy transition measure (share of the population with access to clean fuels for cooking and heating). Given the findings, this study recommends that policymakers should prioritize the expansion of credit availability and microfinance initiatives to deepen the financial system and synergize their efforts for greater financial efficiency to empower households and businesses to adopt renewable energy technologies and create more opportunities for transition to sustainable energy sources in the WAMZ.

Monetary Policy Performance and Economic Growth: An Empirical Evidence for WAMZ Member Countries

This study examines the effect of monetary policy on economic growth of West African Monetary Zone (WAMZ) countries from 2002 - 2022. In the model, money supply (M2), interest rate (INTR), and inflation rate (INFR) are considered the independent variable while real gross domestic product (RGDP) is given as the dependent variable. This study used Ordinary Least Square (OLS) and Panel regression analysis, and finding indicate that money supply and interest rate have positive and statistically significant impact on economic growth among WAMZ member countries. The inflation rate has negative and significant impact on GDP. The random effect model on the other hand reveals that money supply is positive and statistically significant on GDP. Similarly, the effect of interest rate is positive but statistically insignificant on economic growth. However, the impact of inflation rate is negative but statistically significant on economic growth of the WAMZ member countries. Therefore, the study recommends the implementation of sound monetary policies such as expansionary Open Market Operation (to increase money supply as increase in money supply increases economic growth), adjust the contractionary discount rate (by reducing the rate of interest rate in order to expand liquidity and investment). The study also recommended that WAMZ country’s banks should be committed to the mission of price stability, as well as improving the regulatory and supervisory framework to secure a strong financial sector for efficient intermediation, economic growth and development.

Correlations of structural shocks, dynamic responses of output and inflation to commodities price shocks and monetary union in WAMZ

PurposeThis paper examines correlations of the underlying structural shocks and the degree of synchronization in the impulse responses of output, inflation and trade to a one standard deviation shock to non-oil commodities price index and exchange rates within the West African Monetary Zone (WAMZ) countries from 1990q1 to 2020q1.Design/methodology/approachThis paper uses the structural vector autoregressive model to isolate the underlying structural shocks and compares them with the West African Monetary Union (WAEMU) countries.FindingsFindings from the study suggest that correlations of underlying structural shocks are more profound in the WAEMU than in the WAMZ. Impulse responses of output to price and exchange rate shocks are more symmetric in the WAEMU than in the WAMZ. However, impulse responses of inflation to price and exchange rate shocks are symmetric in the WAMZ than in the WAEMU and responses of trade in both sub-groups are not uniform.Practical implicationsThe paper concludes that the WAMZ does not constitute an Optimum Currency Area concerning the correlations of the structural shocks and output. However, it has achieved convergence in inflation and there are adequate adjustment mechanisms to shocks in the WAMZ than in the WAEMU. Therefore, the WAMZ may not suffer from joining the monetary union. Thus, economic Community of West African States may take steps to roll out the monetary union.Originality/valueThe paper examines correlations of the underlying structural shocks, impulse responses of output and inflation to shocks to commodities price and exchange rates in the WAMZ and compares them with the WAEMU.

Ускорение реконфигурации Мир-Системы в связи с СВО и возможные сценарии будущего. Ст. 2. Возможные сценарии реконфигурации Мир-Системы и мирового порядка

Since February 2022, the World-System has entered a new phase of development. Its reconfiguration, associated with the weakening of American dominance, which has been going on since at least 2008 (since the outbreak of the global crisis), has accelerated. The uncertainty about the outcome of Russia's special military operation in Ukraine (SMO), the split in the world, the collapse of the world economy into a number of economic zones, the prospect of the formation of financial and monetary zones and other processes open up other options for transformation of the world order than those that seemed dominant yesterday. The present article aims at bringing together various factors of change into a single picture, to identify a range of possible scenarios for the reconfiguration of the World-System and the transformation of the world order. The present study consists of two closely related articles. In the first article, ‘The Impact of the Special Military Operation in Ukraine on the Reconfiguration of the World-System ‘, we considered the following issues: the balance of power in the USA and the world as a whole due to SMO in Ukraine; which forces in the USA and Europe benefit from the military conflict and which do not; how the military conflict undermines the US world order; why the World-System reconfiguration has been accelerating and what new phase it is entering. It is shown how the situation will change in developed and developing states, and how the global contradiction of the modern world is being transformed. In the second article ‘Possible Scenarios for the Reconfiguration of the World- System and of the World Order’ as the title suggests, we consider in detail several possible scenarios for changes in the World-System in connection with the SMO in Ukraine and the collapse of the modern American world order as well as a number of other aspects of the transformation of the world order.

Assessing Macroeconomic Determinants of Banks’ Efficiency in the West African Monetary Zone

Purpose: This study assesses how six selected macroeconomic variables, namely, size of the banking system, liquid liability of the system, interest rate, inflation, gross domestic product and exchange rate affect banking system efficiency in the West African Monetary Zone countries group. Spanning a twenty-nine-year period (1992 – 2020).
 Methodology: the study used fixed and random effect models of panel least squares to analyze the relationship between these macroeconomic variables and bank efficiency of the countries as a group. Further, the study analyzed the country-by-country net effect of the selected macroeconomic variables on bank efficiency.
 Findings: We find that when examined as a group, only the positive effect of exchange rate on bank efficiency is significant. We also find reveal that the macroeconomic variables have negative effect on bank efficiency in Gambia, Ghana and Sierra Leone while they positively affected bank efficiency in Guinea, Liberia and Nigeria. Finally, we find that interest rate and inflation have causal relationship with bank efficiency in the countries as a group.
 Unique Contribution to Theory, Practice and Policy (Recommendations: We advocate that bankers in the WAMZ critically appraise their size, liquidity and interest rates vis-à-vis their efficiency goal. We also recommend that the governments of Gambia, Ghana and Sierra Leone formulate bank friendly policies especially with respect to interest rates and inflation variables that have causal relationship with bank