Toward a Monetary Union in the East African Community: Asymmetric Shocks, Exchange Rates, and Risk-Sharing Mechanisms

Paulo Drummond, Ari Aisen, C. Emre Alper, Ejona Fuli and Sébastien Walker

No 2015/008, IMF Departmental Papers / Policy Papers from International Monetary Fund

Abstract: This paper examines how susceptible East African Community (EAC) economies are to asymmetric shocks, assesses the value of the exchange rate as a shock absorber for these countries, and reviews adjustment mechanisms that would help ensure a successful experience under a common currency. The report draws on analysis of recent experiences and examines likely future changes in the EAC economies.

Keywords: DPPP; DP; EAC country; interest rate; demand shock; monetary union; EAC economy; Exch. rate; partner state; Exchange rates; Monetary unions; Exchange rate arrangements; Currencies; Supply shocks; West Africa; East Africa; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 58
Date: 2015-07-20
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