Business cycles, bilateral trade and financial integration: Evidence from Economic Community of West African States (ECOWAS)

Stéphane Zouri

International Economics, 2020, vol. 163, issue C, 25-43

Abstract: This paper identifies the determinants of synchronization of business cycles in ECOWAS, which is a key issue from the perspective of creating a single currency in 2020. Indeed, conducting actions in the direction of synchronization of business cycles is important because the asymmetries of cycles observed within a monetary union determine its sustainability. We go further than previous studies in this area, as we (i) take into account financial linkages, (ii) propose new measures to improve the quality of results, and (iii) pay attention to the structure of trade by analyzing inter-regional links. Moreover, to highlight the role of adopting a single currency in ECOWAS, we compare the West African Economic and Monetary Union and the non-monetary zone within the ECOWAS zone. We find that bilateral trade and financial integration are determinants of the synchronization of business cycles in the region, with the regional financial integration channel dominating the international one. Finally, we show that the weakness of intracommunity trade does not constitute a barrier to the monetary union, and that the launch of the single currency is a means to increase business cycles synchronization through bilateral trade.

Keywords: Business cycles; Trade intensity; Financial integration; ECOWAS (search for similar items in EconPapers)
JEL-codes: E32 F15 F36 O55 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2110701719302203
Full text for ScienceDirect subscribers only

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:eee:inteco:v:163:y:2020:i:c:p:25-43

DOI: 10.1016/j.inteco.2020.04.001

Access Statistics for this article

International Economics is currently edited by Valerie Mignon and Marcelo Olarreaga

More articles in International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().