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On The Optimality of The Maghreb Area: An Analysis of The Macroeconomic Shocks

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  • Mohamed Ben Abdallah

    (FSEG Tunis, University of El Manar)

  • Zouheir Bouchaddakh

Abstract

This paper studies the possibility of a monetary union in the Maghreb using the traditional criteria of the optimal currency areas theory. Firstly, we examine the degree of shocks correlation in order to see whether the shocks affecting Maghreb countries are symmetrical or asymmetrical. The analysis of the growth rates reveals dispersions and that of the inflation rates shows that essential efforts remain to be made with regards to monetary cooperation. By developing a structural VAR model based on the methodology of Blanchard and Quah (1989), we show that the macroeconomic shocks are rather heterogeneous in this area supporting the assumption of a relatively high dispersion of economic growth rates. However, our results reveal a relative symmetry of the supply shocks between Morocco and Tunisia.

Suggested Citation

  • Mohamed Ben Abdallah & Zouheir Bouchaddakh, 2009. "On The Optimality of The Maghreb Area: An Analysis of The Macroeconomic Shocks," Working Papers 473, Economic Research Forum, revised Mar 2009.
    • Handle: RePEc:erg:wpaper:473
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    1. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-673, September.
    2. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    3. Bayoumi, Tamim & Eichengreen, Barry, 1992. "Shocking Aspects of Monetary Unification," Department of Economics, Working Paper Series qt791143kp, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    4. Lionel Fontagné & Michael Freudenberg, 1999. "Marché unique et développement des échanges," Économie et Statistique, Programme National Persée, vol. 326(1), pages 31-52.
    5. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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