Currency Union in the East African Community: A Fractional Integration Approach

Hector Carcel, Luis Gil-Alana and Godfrey Madigu ()
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Godfrey Madigu: University of Navarra

A chapter in Economic Integration, Currency Union, and Sustainable and Inclusive Growth in East Africa, 2016, pp 41-54 from Springer

Abstract: Abstract This study examines inflation rates in the five countries that belong to the East African Community (EAC) and which recently signed a protocol outlining their plans for launching a monetary union within 10 years. Its aim is to examine the persistence in inflation levels. As literature argues about monetary unions, countries hoping to form a union should present similar inflation patterns. Our study shows that the countries present non-mean reversion, confirming that shocks will not recover in the long run. Moreover, fractional co-integration relationships are found between all countries with the exception of Tanzania.

Keywords: East Africa union; Monetary union; Fractional integration; Inflation; Persistences (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:aaechp:978-3-319-30432-8_3

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DOI: 10.1007/978-3-319-30432-8_3

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