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Fiscal Convergence in Africa: What Role for Regional Economic Communities?

Author

Listed:
  • Vigninou Gammadigbe

    (Université de Lomé [Togo])

  • Daouda Sembene

    (Fonds Monétaire International)

  • J.-A Tapsoba

    (International Monetary Fund (IMF))

  • Ismaël Issifou

    (LEO - Laboratoire d'Économie d'Orleans [UMR7322] - UO - Université d'Orléans - UT - Université de Tours - CNRS - Centre National de la Recherche Scientifique)

Abstract

The literature on Optimal Currency Areas (OCA) has identified several channels for the ex post justification of common monetary areas based on the synchronicity criterion. These include trade, cross-border investments, mobility of factors, mobility of goods and services, and fiscal convergence of member countries. We focus on the later for the African continent. We analyze the role of African regional economic communities (RECs) in convergence of fiscal policies from 1990 to 2015. Our estimates show that African RECs reduce significantly fiscal divergence between countries. We further find that common monetary areas are more effective in fostering fiscal convergence. This result is in line with the argument of self-validation of monetary arrangements in Africa, despite low levels of cycle synchronization and trade intensity.

Suggested Citation

  • Vigninou Gammadigbe & Daouda Sembene & J.-A Tapsoba & Ismaël Issifou, 2018. "Fiscal Convergence in Africa: What Role for Regional Economic Communities?," Post-Print hal-01877380, HAL.
    • Handle: RePEc:hal:journl:hal-01877380
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    More about this item

    Keywords

    Fiscal convergence; Common monetary areas; Africa;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F15 - International Economics - - Trade - - - Economic Integration
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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