Trade Intensity and Business Cycle Synchronicity in Africa

Sampawende J-A Tapsoba

Journal of African Economies, 2009, vol. 18, issue 2, pages 287-318

Abstract: Business cycle synchronicity, which is the key requirement for sharing a common currency, is not particularly strong within the prospective African monetary unions. However, this parameter is not irrevocably fixed and may be endogeneous vis-à-vis the integration process. For example, trade may increase the similarity of economic disturbances. This paper tests such an effect among the 53 African countries from 1965 to 2004. The estimated results suggest that trade intensity increases the synchronisation of business cycles in the African context. The magnitude of the 'endogeneity effect' is, however, smaller than similar estimates among industrial countries. Copyright 2009 The author 2008. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Date: 2009

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