Are Proposed African Monetary Unions Optimal Currency Areas? Real and Monetary Policy Convergence Analysis

Simplice Asongu

MPRA Paper from University Library of Munich, Germany

Abstract: A spectre is hunting embryonic African monetary zones: the EMU crisis. The introduction of common currencies in West and East Africa is facing stiff challenges in the timing of monetary convergence, the imperative of bankers to apply common modeling and forecasting methods of monetary policy transmission, as well as the requirements of common structural and institutional characteristics among candidate states. Inspired by the premise of the EMU crisis, this paper assesses real and monetary policy convergence within the proposed WAM and EAM zones. In the analysis, monetary policy targets inflation and financial dynamics of depth, efficiency, activity and size while real sector policy targets economic performance in terms of GDP growth at macro and micro levels. Findings suggest overwhelming lack of convergence; an indication that candidate countries still have to work towards harmonizing cross-country differences in fundamental, structural and institutional characteristics that hamper the convergence process.

Keywords: Currency Area; Convergence; Policy Coordination; Africa (search for similar items in EconPapers)
JEL-codes: F15 F36 F42 O55 P52 (search for similar items in EconPapers)
Date: 2012-01-19
New Economics Papers: this item is included in nep-afr, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Working Paper: Are Proposed African Monetary Unions Optimal Currency Areas? Real and Monetary Policy Convergence Analysis (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:36056

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