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Real convergence in West African Economic and Monetary Union (WAEMU)

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  • Bah, Mohamed Siry

Abstract

The purpose of this study is to address the gap in research on real convergence in the WAEMU. We have referred to the methodology of Carlino and Mills (1993), which combines the analysis of stochastic and β-convergence. Perron (1989) has shown that neglecting structural breaks in unit root tests can lead to erroneous conclusions; therefore, we have used the Carrion-i-Silvestre et al. (2005) panel stationarity test to address this problem. By using the Bai and Perron (1998) procedure to identify the structural breaks endogenously, we have been able to show that the WAEMU countries have actually been subjected to several heterogeneous shocks. When these shocks were taken into account in the unit root tests, a stochastic convergence emerged for five countries in the WAEMU. Moreover, additional analysis in terms of β-convergence showed that Burkina Faso and Mali are engaged in a catching-up process; Togo is converging toward the community average whereas Niger and Senegal are diverging from it.

Suggested Citation

  • Bah, Mohamed Siry, 2015. "Real convergence in West African Economic and Monetary Union (WAEMU)," Economics Letters, Elsevier, vol. 135(C), pages 19-23.
    • Handle: RePEc:eee:ecolet:v:135:y:2015:i:c:p:19-23
    DOI: 10.1016/j.econlet.2015.07.020
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    References listed on IDEAS

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    1. Mohamed Siry Bah, 2014. "Is there a stochastic convergence process in the West African economic and monetary union in presence of multiple structural breaks from 1960 to 2010?," Economics Bulletin, AccessEcon, vol. 34(3), pages 1917-1928.
    2. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
    3. John Dawson & Amit Sen, 2007. "New evidence on the convergence of international income from a group of 29 countries," Empirical Economics, Springer, vol. 33(2), pages 199-230, September.
    4. Donggyu Sul & Peter C. B. Phillips & Chi‐Young Choi, 2005. "Prewhitening Bias in HAC Estimation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(4), pages 517-546, August.
    5. Josep Lluís Carrion-i-Silvestre & Tomás del Barrio-Castro & Enrique López-Bazo, 2005. "Breaking the panels: An application to the GDP per capita," Econometrics Journal, Royal Economic Society, vol. 8(2), pages 159-175, July.
    6. Kurozumi, Eiji, 2002. "Testing for stationarity with a break," Journal of Econometrics, Elsevier, vol. 108(1), pages 63-99, May.
    7. Carlino, Gerald A. & Mills, Leonard O., 1993. "Are U.S. regional incomes converging? : A time series analysis," Journal of Monetary Economics, Elsevier, vol. 32(2), pages 335-346, November.
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    Cited by:

    1. Alexandrov Nevski Sachs Semanou & Kamil Uslu, 2019. "Comparative Analysis of Growth Convergence in Selected West African Countries," Business and Economic Research, Macrothink Institute, vol. 9(3), pages 87-101, September.
    2. Vítor JPD Martinho, 2018. "A transversal perspective on global energy production and consumption: An approach based on convergence theory," Energy & Environment, , vol. 29(4), pages 556-575, June.
    3. A D Adom, 2016. "Resilience of developing countries to shocks: Case study of WAEMU countries with SUR and VAR Approaches," Economic Issues Journal Articles, Economic Issues, vol. 21(2), pages 105-138, September.

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    More about this item

    Keywords

    Real convergence; Stochastic convergence; Panel stationarity test with multiple structural breaks;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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