Asymmetric Terms-of-Trade Shocks in a Monetary Union: An Application to West Africa

Agnès Benassy-Quere, Loïc Batté, Benjamin Carton () and Gilles Dufrénot ()

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We propose a two-country dynamic stochastic general equilibrium model of a monetary union facing asymmetric terms-of-trade shocks, calibrated on Nigeria and West African Economic and Monetary Union (WAEMU). Three monetary regimes are successively studied at the union level: a flexible exchange rate with constant money supply, a flexible exchange rate with an accommodating monetary policy and a fixed exchange-rate regime. We find that, in the face of oil-price shocks, the most stabilising regime for Nigeria is a fixed money supply, whereas it is a fixed exchange rate for WAEMU. However, the introduction of an oil-stabilisation fund can reduce the disagreement on the common policy rule. Furthermore, the two zones may agree on a fixed money-supply rule in the face of both oil- and agricultural-price shocks.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Published in Journal of African Economies, 2010, 19 (5), pp.657-690. ⟨10.1093/jae/ejq022⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Asymmetric Terms-of-Trade Shocks in a Monetary Union: An Application to West Africa (2010)
Working Paper: Asymmetric Terms-of-Trade Shocks in a Monetary Union: An Application to West Africa (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-00634785

DOI: 10.1093/jae/ejq022

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().