Does regional currency integration ameliorate global macroeconomic shocks in sub-Saharan Africa? The case of the 2008-2009 global financial crisis

Gregory Price and Juliet U. Elu

Journal of Economic Studies, 2014, vol. 41, issue 5, 737-750

Abstract: Purpose - – The purpose of this paper is to consider whether regional currency integration in sub-Saharan Africa ameliorates global macroeconomic shocks by considering the impact of the 2008-2009 global financial crisis on economic growth. This suggests that Central Africa Franc Zone (CFAZ) eurocurrency union membership amplifies the effects of global business cycles in sub-Saharan Africa. Design/methodology/approach - – The authors estimate the parameters of a quantity theory model of economic growth within a Generalized Estimating Equation (GEE) Framework. Findings - – Parameter estimates from GEE specifications reveal that the contraction in credit during the financial crisis of 2008-2009 had larger adverse growth effects on sub-Saharan African countries who were members of the CFAZ eurocurrency union. The authors also find that sub-Saharan African countries who were members of the CFAZ eurocurrency union were more likely to experience a contraction in credit. Originality/value - – As far as the authors can discern, no existing empirical growth models use a GEE framework to estimate parameters of interest. The GEE parameter estimates are distribution-free, robust with respect to unknown forms of heteroskedasticity, and control for a wide variety of error structures that can induce bias in panel data parameter estimates.

Keywords: Financial crisis; Economic growth; sub-Saharan Africa; Currency unions; CFAZ eurocurrency union; Contraction of credit (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (79)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:v:41:y:2014:i:5:p:737-750

DOI: 10.1108/JES-08-2011-0092

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