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

Moritz Manuel Peist

No 210/2023, IPE Working Papers from Berlin School of Economics and Law, Institute for International Political Economy (IPE)

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.

Keywords: Original Sin; WAEMU; CFA Franc; Tobit (search for similar items in EconPapers)
JEL-codes: C33 C34 F3 F4 F6 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-mon and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ipewps:2102023

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