Are the East African Community's Countries Ready for a Common Currency?

Thomas Kigabo-Rusuhuzwa () and Almas Heshmati ()
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Thomas Kigabo-Rusuhuzwa: University of Rwanda

No 15210, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates the East African Community (EAC) partner states' readiness for a common currency. It uses recent data to assess the impact of policy coordination in the region during the last seven years of East African Monetary Union's protocol implementation. Despite some similarities in the structures of EAC economies, EAC member states remain susceptible to asymmetric shocks. Inflation is in the process of converging in EAC, but the speed of convergence is slow. Time is needed for preparing and for harmonizing policy before adopting the common currency. Adopting a common currency will lead to considerable costs for EAC countries.

Keywords: East African Community; monetary union; common currency; policy harmonization; convergence; regional integration (search for similar items in EconPapers)
JEL-codes: E42 F33 N17 O23 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2022-04
New Economics Papers: this item is included in nep-afr, nep-int, nep-mac, nep-mon and nep-pay
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