Monetary, Financial and Fiscal Stability in the East African Community: Ready for a Monetary Union?

Laetitia Lepetit, Clovis Rugemintwari and Frank Strobel

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Abstract: We examine prospects for a monetary union in the East African Community (EAC) by developing a stylized model of policymakers' decision problem that allows for uncertain benefits derived from monetary,financial and fiscal stability, and then calibrating the model for the EAC for the period 2003-2010. When policymakers properly allow for uncertainty, none of the countries wants to pursue a monetary union based on either monetary or financial stability grounds, and only Rwanda might favor it on fiscal stability grounds; we argue that robust institutional arrangements assuring substantial improvements in monetary, financial and fiscal stability are needed to compensate.

Keywords: East; African; Community (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (15)

Published in The World Economy, 2015, 38 (8), pp.1179-1204

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Related works:
Journal Article: Monetary, Financial and Fiscal Stability in the East African Community: Ready for a Monetary Union? (2015)
Working Paper: Monetary, Financial and Fiscal Stability in the East African Community: Ready for a Monetary Union? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01134835

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