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Original sin and the CFA Franc: A case study of the West African Economic and Monetary Union

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  • Peist, Moritz Manuel

Abstract

This paper investigates Original Sin in the West African Economic and Monetary Union in the framework of regional integration and cooperation initiatives. The phenomenon describes the inability of countries to borrow in their currency. The central hypothesis is that smaller South-South Coordination schemes do not possess the necessary magnitude to overcome Original Sin. The paper first substantiates the existence of Original Sin in West Africa. It then examines the influence of economic, fiscal, and monetary factors on the time variance of Original Sin in the region using a Tobit model. The results delivered mixed outcomes but confirm Original Sin's negative correlation with country size. The results uphold the hypothesis that financial and monetary integration and cooperation alone are not a panacea for Original Sin.

Suggested Citation

  • Peist, Moritz Manuel, 2023. "Original sin and the CFA Franc: A case study of the West African Economic and Monetary Union," IPE Working Papers 210/2023, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    • Handle: RePEc:zbw:ipewps:2102023
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    References listed on IDEAS

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    More about this item

    Keywords

    Original Sin; WAEMU; CFA Franc; Tobit;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F6 - International Economics - - Economic Impacts of Globalization

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