The CFA Arrangements: More Than Just an Aid Substitute?

Etienne B. Yehoue

Economie Internationale, 2006, issue 107, 107-133

Abstract: The CFA franc zone has had one of the longest experiences with a fixed exchange rate for a convertible currency and regional integration of any group of developing countries. France, the anchor country, provides aid to support the zone. This paper asks whether the arrangements are more than just an aid substitute. The paper addresses this issue by evaluating the overall performance of the zone over the period 1960-2004. The analysis reveals that when the zone is hit by a negative shock, France increases its aid, thereby acting as a shock absorber. However, it also finds that the zone displays strong performance in two areas—price stability and fiscal policy. Thus the paper concludes that the arrangements are not an aid substitute; they have real macroeconomic value for the zone and complement aid.

Keywords: Currency unions; international risk sharing; aid; trade; monetary block (search for similar items in EconPapers)
JEL-codes: E63 F15 F33 F35 (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.cepii.fr/IE/rev107/ei107e.htm (text/html)

Related works:
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:cii:cepiei:2006-3te

Access Statistics for this article

More articles in Economie Internationale from CEPII research center Contact information at EDIRC.
Bibliographic data for series maintained by ().