Fiscal Reform and Monetary Union in West Africa

Carsten Hefeker

No 224, HWWA Discussion Papers from Hamburg Institute of International Economics (HWWA)

Abstract: The paper explores the interaction between the proposed monetary union for ECOWAS and structural reforms of fiscal policy. The effects depend to a large extent on the degree of similarity of member countries. In a monetary union of similar countries, member states run a more distortive fiscal policy, while their structural reform efforts will fall. This is also the case for countries that unilaterally peg to an anchor currency or introduce a foreign currency. In an monetary union with dissimilar countries the reverse can happen for those member states that are confronted with high distortion countries. This result implies that current WAEMU members will run a less distortive fiscal policy after the inclusion of other members of ECOWAS.

Keywords: West Africa; monetary union; fiscal policy; structural reforms (search for similar items in EconPapers)
JEL-codes: E61 E63 F33 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Fiscal reform and monetary union in West Africa (2010)
Working Paper: Fiscal Reform and Monetary Union in West Africa (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hwwadp:26257

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