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How Feasible Is the ECO Currency? A Study of ECOWAS Business Cycles Synchronicity

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  • Youssef El Jai

Abstract

Using a Structural vector auto-regression analysis, this paper attempts to answer the question of the feasibility of a currency union in the Economic community of West African states (ECOWAS). The study focuses on a particular criterion of the theory of optimum currency area (OCA) i.e. the similarity of business cycles. The main results suggest important discrepancies between countries that are already within the WAEMU (CFA Franc) arrangement and countries that have their own arrangement (WAMZ area). In particular, it is possible to distinguish a core and a periphery within the community.

Suggested Citation

  • Youssef El Jai, 2020. "How Feasible Is the ECO Currency? A Study of ECOWAS Business Cycles Synchronicity," Research papers & Policy papers on Economic Trends and Policies 2009, Policy Center for the New South.
    • Handle: RePEc:ocp:rpaeco:rpnn_43
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    References listed on IDEAS

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    1. Campos, Nauro F. & Macchiarelli, Corrado, 2016. "Core and Periphery in the European Monetary Union: Bayoumi and Eichengreen 25 years later," Economics Letters, Elsevier, vol. 147(C), pages 127-130.
    2. Fielding, David & Shields, Kalvinder, 2001. "Modelling macroeconomic shocks in the CFA Franc Zone," Journal of Development Economics, Elsevier, vol. 66(1), pages 199-223, October.
    3. Bayoumi, Tamim & Eichengreen, Barry, 2020. "Aftershocks of monetary unification: Hysteresis with a financial twist," Journal of Banking & Finance, Elsevier, vol. 113(C).
    4. Jidoud, Ahmat, 2012. "The Sources of Macroeconomic Fluctuations in Subsaharan African Economies: An application to Côte d'Ivoire," TSE Working Papers 12-346, Toulouse School of Economics (TSE).
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